Meristem Stockbrokers has projected a sustained rally in the equities market, saying strong fundamentals, easing inflationary pressures and improving macroeconomic stability will continue to support robust returns for investors.

The Managing Director and Chief Executive Officer of Meristem Stockbrokers, Saheed Bashir, disclosed this at the firm’s annual economic outlook in Lagos, themed From Stability to Strength, where he said recent economic stability has laid the groundwork for stronger market performance.

“Despite the level of return we saw, there is still a lot of value in those companies,” Bashir said. “A 51 per cent return does not mean the equities market is overvalued. Economic fundamentals still support very strong performance.”

He noted that equities delivered over 51 per cent returns, with some stocks gaining more than 100 per cent, stressing that the rally was driven by improved macroeconomic conditions rather than speculation.

Bashir said inflationary pressures were beginning to ease, countering concerns about a resurgence in price pressures. “We do not see inflation taking a reverse course,” he said. “The deceleration we saw in the second half is expected to continue, with inflationary pressures being tamed further.”

According to him, moderating inflation should also translate into lower interest rates, creating a more supportive environment for equities.

 “If inflation continues to moderate, interest rates will also follow,” he said.

On fiscal reforms, Bashir described government revenue mobilisation as critical to economic growth, noting that recent tax reforms could improve funding for infrastructure and social services. “Government revenue is key to funding infrastructure, education, health and security,” he said, adding that better tax compliance should lead to improved service delivery and higher living standards.

He also identified market liquidity as a key challenge, urging greater participation by long-term investors. “The more we see participation from pension funds, insurance companies and foreign long-term funds, the more liquid our market will become,” Bashir said.

In the banking sector, he said recapitalisation remains crucial to supporting broader economic ambitions, noting that the financial services industry plays a central role in driving growth.

Meanwhile, panellists at the event said ongoing reforms are directionally positive, particularly tax changes aimed at boosting government revenue after years of fragmented amendments. They noted that while corporate income tax remains unchanged, additional levies raise the effective tax burden for some businesses, although the removal of minimum tax for loss-making firms was seen as a positive development.

The panellists also said recent credit rating upgrades signalled improved investor confidence and lower borrowing costs but warned that weak revenue performance remains a key risk, with debt service still consuming a large share of government revenue.

They agreed that sustained implementation of reforms, continued inflation moderation and improved communication would be critical to ensuring that economic gains translate into tangible benefits for households and investors alike.