Nigerian Exchange Defies Inflation, Records 200% Gain Since 2023 Reforms – Adenikinju

…Says Reforms Spark Investor Flight to Equities

Despite record-high inflation and steep depreciation of the naira, Nigeria’s capital market has delivered exceptional performance since the economic reforms of 2023, with the Nigerian Exchange (NGX) All-Share Index (ASI) surging by more than 200 per cent.

This was revealed by a professor of economics at the University of Ibadan, Professor Adeola Adenikinju, in a paper titled “Exchange Rate Volatility, Inflation and Capital Market Performance: Policy Lessons for Nigeria”, presented at the 8th Fellowship Inaugural Lecture of the Capital Market Academics of Nigeria.

According to Adenikinju, President Bola Tinubu’s reforms, including the removal of the fuel subsidy and the unification of the foreign exchange market, triggered significant short-term economic shocks, including a naira depreciation of more than 70 per cent since May 2023 and inflation peaking at 34.8 per cent by December 2024.

However, equities responded strongly, with the ASI climbing from 47,112 points in May 2023 to 141,337 points by September 2025, representing a 200 per cent gain.

He attributed the rally to a “flight to safety”, as both domestic and foreign investors sought refuge in equities to hedge against inflation and currency risks.

Banking and consumer goods stocks led the surge, while the energy sector remained volatile due to global oil market swings and its relatively small weight in the NGX.

“Despite high inflation and exchange rate volatility, the capital market became a refuge for investors, delivering strong returns and demonstrating resilience,” Adenikinju noted. “It reflects equities acting as an inflation hedge, exchange rate translation gains, and improved investor confidence in reforms.”

The economist further highlighted that the market’s bullish trend was supported by foreign inflows and increasing confidence in reforms aimed at strengthening transparency and fiscal discipline. Total transactions on the NGX rose to ₦75.9trn in the first half of 2025, a 39 per cent increase from ₦54.5trn in the same period of 2024.

Adenikinju also observed that market volatility has moderated since mid-2024, with annualised fluctuations averaging 13.3 per cent between 2020 and September 2025. The NGX ranked second globally in performance in 2023, first in 2024, and again retained the top spot in the first half of 2025.

However, he cautioned that persistent macroeconomic instability still poses a risk to investor confidence. “Exchange rate volatility and inflation are powerful forces shaping capital market performance.

They reduce real returns, increase uncertainty, and trigger capital flight. But with sound macroeconomic policy, sector-sensitive reforms, and stronger institutions, these effects can be mitigated,” he said.

He stressed that the capital market must play a central role in mobilising long-term financing to diversify the economy beyond oil, foster innovation, create jobs, and promote sustainable growth.

“Economic reforms have energised Nigeria’s capital market, but unless supported by stable policies and strong institutions, the benefits may not be sustained,” Adenikinju said.

Earlier in his opening remarks, the President of CMAN, Prof. Uche Uwaleke, explained that inaugural lectures by fellows of Capital Market Academics of Nigeria are a novel idea in Nigeria and CMAN’s own unique way of contributing to the development of the country’s financial markets.