A new report by VNL Capital Asset Management said Nigeria could still offer investors attractive returns this year despite rising global uncertainty, driven by higher oil prices, tight monetary policy and geopolitical tensions.

The report, titled ‘Global Uncertainty, Local Opportunity, projects that global economic growth will slow to about three per cent in 2026 as elevated energy prices and restrictive financial conditions weigh on activity.

It noted that inflation, though lower than recent peaks, is expected to rise again, driven largely by oil price shocks following disruptions in the Middle East. Brent crude recently surged above $100 per barrel, increasing inflationary pressures and limiting the ability of central banks to ease interest rates.

According to the report, the global economy is entering a fragile phase where growth remains stable but vulnerable to shocks, particularly from energy markets. It added that extreme volatility in oil prices historically weakens economic growth by raising production costs, reducing consumer spending and increasing uncertainty across financial markets.

The firm said this environment is likely to shape investment strategies in 2026, with investors expected to favour selective allocations rather than broad market exposure. Commodities such as gold and energy assets are projected to remain attractive due to geopolitical risks and supply constraints, while fixed income yields are expected to stay elevated.

Global equities, it added, will remain uneven, with sectors such as energy and utilities likely to outperform, while technology continues to benefit from long-term investment in artificial intelligence.

On commodities, the report highlighted strong demand for gold driven by central bank accumulation and a shift away from the dollar. It also pointed to sustained structural demand for silver, supported by industrial uses in renewable energy and technology, although supply constraints persist.

The oil market, however, remains the most critical factor in the global outlook. The report estimates that recent disruptions to supply routes, particularly the Strait of Hormuz, have reduced global oil output significantly, tightening supply and increasing price volatility.

For Nigeria, the report said the outlook is cautiously improving, supported by structural reforms, relative exchange rate stability and higher oil prices. These factors are expected to strengthen external reserves and support economic activity.

However, it warned that risks remain, including fiscal pressures, weak government revenues and liquidity constraints, which could affect overall economic performance.

The report noted that Nigeria’s financial markets are likely to be driven by domestic policy decisions and global liquidity conditions. Fixed income markets, in particular, are expected to benefit from high yields amid increased government borrowing.

It added that Nigerian equities remain undervalued, creating opportunities for investors willing to take on risk in a volatile environment.

Overall, VNL Capital said 2026 will not be defined by broad economic expansion but by targeted opportunities, urging investors to adopt d
isciplined strategies and active risk management.

“Investment success will depend on disciplined asset allocation, active risk management, and the ability to navigate global shocks and domestic structural realities,” the report stated.