Key Drivers Behind Nigeria’s Stock Market Surge in 2025
The Nigerian equities market has experienced a remarkable growth, with market capitalization soaring by N26.01 trillion within the first eight months of 2025. Experts attribute this robust performance to several critical factors, including the stabilization of the foreign exchange rate, corporate recovery from previous FX-related losses, enhanced liquidity conditions, and a surge in capital inflows.
Additionally, the market’s expansion has been supported by the predominance of domestic investors, a rise in portfolio investments, strategic recapitalization efforts by the Central Bank of Nigeria (CBN), and significant reforms within the insurance sector. These elements collectively have fostered a more resilient and attractive investment environment.
Market Capitalization and Index Growth: A Closer Look
Starting the year at N62.76 trillion, Nigeria’s market capitalization climbed impressively to N88.77 trillion by August 29, 2025. This represents a 41.5% increase, underscoring the market’s strong upward momentum. Correspondingly, the Nigerian Exchange Limited All-Share Index (NGX ASI) surged by 36.31%, rising from 102,926.40 points at the close of 2024 to 140,295.50 points.
The year also marked notable corporate activities, including the introduction listing of Legend Internet Plc and several banks unveiling the results of fresh capital-raising initiatives on the exchange. These developments have further invigorated market dynamics.
Corporate Earnings and Foreign Investment: Catalysts for Growth
Improved corporate earnings have played a pivotal role in sustaining market gains, with many stocks posting significant month-to-date returns. Foreign investor interest has also intensified, attracted by Nigeria’s improving economic fundamentals and market stability.
According to Mr. Aruna Kebira, Managing Director of Globalview Capital Limited, the decline in inflation rates coupled with less appealing yields in the money market has redirected investor focus towards equities. “With money market returns becoming less competitive compared to 2024, investors seeking higher yields are increasingly turning to the stock market,” Kebira explained.
He further noted that the recent Monetary Policy Committee (MPC) decision to maintain the Monetary Policy Rate (MPR) signals potential future rate cuts, which could further enhance equity market attractiveness despite being less favorable for fixed income instruments.
Outlook for the Coming Months: Earnings and Liquidity as Key Indicators
Kebira anticipates that the market’s trajectory in September will hinge on the half-year audited results from major banks. “Should these institutions report stronger performances than in 2024 and declare attractive interim dividends, we expect a positive market reaction with increased liquidity and bullish momentum,” he stated.
Supporting this optimistic view, Mr. Kasimu Kurfi, CEO of APT Securities and Funds Limited, forecasts that market capitalization could exceed N100 trillion by year-end. He credits this potential milestone to sustained FX stability, solid corporate fundamentals, and heightened activity in the primary market.
Impact of FX Stability and Regulatory Reforms on Investor Confidence
Kurfi highlighted that the absence of foreign exchange losses in 2025-contrasting sharply with the N867 billion pre-tax FX losses recorded between 2023 and 2024-has significantly bolstered investor confidence. This turnaround is largely due to exchange rate stability and regulatory reforms.
He also pointed to the Nigerian Insurance Industry Reform Act (NIIRA 25) as a catalyst for the recent rally in insurance stocks. Furthermore, the CBN’s bank recapitalization program, which attracted over N2 trillion in 2024, is expected to maintain similar momentum this year, reinforcing the financial sector’s robustness.
Blue-Chip Stocks and Sector Rotation: Trends Shaping Market Dynamics
David Adonri, Vice President of Highcap Securities, observed that renewed investor enthusiasm for blue-chip companies such as Airtel Africa, Nestle Nigeria, Nigerian Breweries, Cadbury Nigeria, and MTN Nigeria Communications (MTNN) has been a significant driver of the 2025 market rally.
Meanwhile, analysts at Cordros Research anticipate that the equities market will respond favorably to the MPC’s pause on interest rate hikes. They expect a strategic rotation into sectors poised for growth in a lower interest rate environment, particularly manufacturing. Reduced financing costs, improved input price dynamics, and stronger consumer demand are projected to enhance expansion prospects in this sector.
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