Gill: Nigeria is Perceived Far More Positively Today Than  in Recent Years

The Chief Investment Officer, Africa, Middle East, and Europe, Standard Chartered, Manpreet Gill, outlines the 2026 global market outlook in this conversation with Nume Ekeghe. Excerpts:

How would you summarise global market performance recently, and what are the key themes shaping your outlook for 2026?

Overall, portfolio performance has been strong over the past year, and we are quite satisfied with outcomes so far. Looking ahead to 2026, our outlook is anchored around three major global themes.First is equities. We believe equities can continue to rise, and we use the word “inflate” deliberately. There is ongoing debate about whether markets particularly United States (US) technology are in bubble territory. However, strong earnings growth has helped justify current valuations. That said, we do not want portfolios overly concentrated in a single theme like tech or Artifical Intelligent (AI). As a result, we have raised our allocation to Asian equities, particularly China, where we believe there is further upside, and India, where disappointment has been over-priced and valuations now look more attractive.Second is income generation. Despite elevated bond valuations in the US and Europe, we believe investors can still generate attractive US dollar income. This is best achieved by tilting towards emerging market bonds, including Asia, the Middle East, parts of Africa, and Latin America, where yields are more compelling. In addition, US Treasuries still provide a relatively high yield floor.

Third is diversification. In a world where valuation debates are intense and currency dynamics are shifting, diversification is more important than ever. Beyond a balanced mix of US and non-US equities, we continue to favour gold and select alternatives as portfolio diversifiers to reduce concentration risk.

What are the key risks investors should be mindful of in 2026?

Many of the well-known risks remain centred around US policy uncertainty, particularly unexpected fiscal or trade shifts. However, from a macroeconomic standpoint, the global environment appears relatively stable. Governments across the US, Europe, China, and India are broadly supportive of growth, and central banks are largely in easing mode. The US Federal Reserve, in particular, still has room to cut rates further.

One risk that is underappreciated, however, is Japanese interest rates. For decades, Japan’s ultra-low rates have been a major source of global liquidity.

Today, Japan is the only major economy raising rates, with long-term bond yields already higher than those in China and Europe and approaching US levels. While this is not an imminent threat, a narrowing rate gap could eventually raise global funding costs, creating a potential tipping point investors need to watch closely.

How has the global economic environment evolved compared to 2025?

Three developments stand out. First, inflation is no longer the dominant concern it was last year, particularly in the US and other major economies. Inflation is trending lower and is expected to continue easing. Second, growth has softened in some regions, especially visible in the US labour market. This combination of lower inflation and softer growth supports our view that the Federal Reserve can cut rates. Third, there has been a notable shift in commodity and precious metals prices, with some prices up as much as 60 per cent. While not strictly a macro policy issue, it is a meaningful structural change that investors must incorporate into their outlook.

What is your outlook for Africa within the global investment landscape?

We are more constructive on Africa than market sentiment suggests. The single most important supportive factor is the weaker US dollar. Historically, there is a strong relationship between dollar weakness and increased capital flows into emerging and frontier markets, including Africa.

We have already seen this dynamic play out. A weaker dollar eases pressure on local currencies, bond yields, and financing conditions. In addition, higher commodity prices though varied by commodity provide further support. From a bond investor’s perspective, improving external balances and credit quality across parts of Africa are encouraging signs. Taken together,  dollar dynamics, credit improvement, and commodity trends point to a more supportive global backdrop for the region.

How should investors position portfolios amid changing inflation and interest rate cycles, particularly with regard to emerging markets?

The environment favours increased allocation to emerging markets overall. While the US remains an important anchor, the incremental allocation is increasingly directed toward emerging markets.

Within this, Asian equities remain our top preference, while Africa features more prominently within our emerging market bond overweight. Historically, a weaker dollar has almost always been positive for emerging market performance, often allowing them to outperform developed markets.

Nigeria, specifically, sits within frontier market classifications for equities, which limits structural allocations for large global investors. However, African bonds including Nigerian exposures are well represented within emerging market bond universes and benefit from this allocation trend.

How do you assess Nigeria’s investment outlook heading into 2026?

Nigeria is perceived far more positively today than in recent years. Policy stability, market reforms, and improved currency dynamics have increased investor willingness to allocate capital. Importantly, fundamentals alone are not enough. A turning point in the US rate and dollar cycle has played a major role in unlocking performance across frontier markets, including Nigeria. The roughly 10 per cent dollar weakness seen recently has materially supported Nigerian equities and broader asset performance. We believe this supportive backdrop should continue.

Has US dollar stabilisation translated into sustained investor interest in emerging and frontier markets?

Yes, and in fact we have been positively surprised. We initially expected a stable-to-weak dollar, but the degree of dollar weakness exceeded expectations. This has significantly reduced pressure on emerging market assets and strengthened the case for both equity and bond allocations. As a result, we have been incrementally increasing exposure to emerging markets across our asset allocation framework.

Are there specific sectors that stand out globally in 2026?

Our sector views are focused on the most liquid markets, the US, Europe, China, and India where full sector representation exists.

We continue to favour technology, supported by strong earnings momentum, despite valuation debates. However, we are also actively seeking non-technology opportunities. In the US, sectors such as healthcare and utilities appear attractive, particularly as regulatory concerns in healthcare have eased.

In China and India, we expect improving growth to translate into stronger earnings in consumer-oriented sectors. While sector strategies are harder to implement in smaller or less liquid markets, the broader emerging market theme remains supported by policy easing, capital inflows, and consumer growth.

Is the current stabilisation in Nigeria and other emerging markets sustainable?

The signs are encouraging, and we are optimistic. However, as investors, sustainability must always be weighed against what is already priced into markets. Markets move in cycles, and our process continuously balances fundamentals against valuations. That said, on long-term metrics, emerging markets have underperformed for several years. We are now beginning to see tentative turning points aligned with shifts in the US rate and dollar cycle. This gives us confidence that there is still room for further upside, even as we remain disciplined and valuation-aware.