Corporate earnings, others to thrust stock market performance in 2025
Analysts anticipated a positive outlook for the equities from improved sentiment towards ongoing bank recapitalisation exercise, new listings and resilient corporate earnings.
Analysts stated that, it is expected that the year 2025 will offer a mix of challenges and opportunities. Nigeria’s economy is poised to grow at its fastest pace since 2014, with GDP growth expected to reach 3.7 per cent on the back of healthy performances in oil & gas and manufacturing.
Inflation is projected to moderate, and the Central Bank of Nigeria (CBN) is likely to lower interest rates in the second half of the year, creating an optimistic outlook for both fixed income and equities.
Nigerian stock should stand out as a high-return opportunity, with a forecasted c.40.0 per cent return driven by expectations of improved fundamentals, naira stability, and recovery in corporate performances.
Coming from 2024, the key performance indicator of the NGX, the All-Share Index (ASI) went up by 37.72 per cent to close the year 2024 at 102,926.40 points from 74,773.77 points at which it opened trading for the year. Similarly, market capitalisation for the period gained by N21.845 trillion to N62.763 trillion from N40.918 trillion.
On market outlook in 2025, Group managing director/chief executive of Nigerian Exchange Group Plc, Temi Popoola said that “we remain optimistic that continued reforms and a stable macroeconomic environment will sustain growth, boost liquidity, enhance investor confidence, and deliver long-term value for all market participants.”
President of Chartered Institute of Stockbrokers (CIS), Mr. Oluropo Dada said “on the outlook for 2025, and going by the federal government’s budget that pegged inflation rate at 15 per cent, it is almost certain that capital market, especially stock market will be the best investment destination. With the market being dominated by local investors, stability of prices can be guaranteed. By and large, I expect a bullish market.”
Analysts at Afrinvest Limited said that “our prognosis for 2025 suggests a positive risk assessment amid various macroeconomic and market dynamics. On a base case, we anticipate a 30.4 per cent gain from improved sentiment towards ongoing bank recapitalisation exercise, new listings, resilient corporate earnings and expectation of CBN’s monetary policy easing in H2, 2025.”
CardinalStone in its report titled ‘2025 Economic Outlook; Pressure To Plateau’ added that, “our outlook is positive for Nigerian equities, shaped by improving macro dynamics; emerging gains from ongoing corporate actions; growing interest from foreign investors; possible re-inclusion of Nigeria in the MSCI FM index; strategic balance sheet restructuring and deleveraging exercises; and cheap valuation.
“We adopt a top-down approach to delineate potential options for equity investors in 2025. Under our base case, we see growth, with the oil & gas and manufacturing sectors likely to be pivotal.
“Our 2025 sectoral allocation is pro-growth, with emphasis on upstream oil and gas, driven by recent developments under the Petroleum Industry Act (PIA). The year 2025 is likely to benefit from the impact of ongoing or completed corporate actions.
“We view the banking sector recapitalisation as a net positive in the near to medium despite concerns over short-term dilution effects.”
The research firm added that 2025 could see foreign participation rise to over 30.0 per cent as confidence remains on the rise, stemming from easy repatriation and the creation of the electronic FX system.
It noted that, “from our analysis, we expect the Nigerian equities market to return 40.4 per cent in 2025, marking the sixth consecutive positive annual gain. On a risk-adjusted basis, the market should return 15.6 per cent or an expected return per risk of 1.63x in 2025.”
