The Nigerian Exchange Limited (NGX) closed the year 2024 on a positive note, driven by renewed investor confidence in listed companies.
This marks a significant achievement for NGX, despite ongoing economic adversities such as heightened inflation, currency depreciation, and security challenges.
This optimism has translated into discernible changes in purchasing patterns, with the All-Share Index closing at 102,926.40 index points as of December 31, 2024.
The year-to-date (YTD) return of the NGX All-Share Index stands at 37.65 per cent highlighting strong performance despite volatility in the economy.
Financial experts in an exclusive chat with THE WHISTLER have predicted that Nigeria’s capital market closing 2024 strong is set for growth in 2025, driven by new listings, banking recapitalization, and infrastructure investments, supported by government policies and private capital initiatives.
They noted that macroeconomic factors, including a projected easing of inflation, potential interest rate reductions, and a stable foreign exchange rate of N1,550 per dollar, are expected to boost investor confidence and market performance.
The experts also said that challenges such as capital raising delays and banking sector hurdles may prompt more mergers and acquisitions, while ongoing reforms and improved processes aim to sustain market stability and attract investments.
The Nigerian capital market is expected to experience significant growth in 2025, driven by a wave of new listings and the government’s focus on leveraging private capital for national development.
This optimistic outlook was shared by Tajudeen Olayinka, a seasoned investment banker and stockbroker, who emphasized the positive impact of these factors on market performance.
According to Olayinka, the anticipated increase in public listings will inject liquidity into the market, attracting more investors and enabling companies to raise much-needed capital.
“The government’s intention to harness private capital in 2025 will prompt more public companies to approach the market for capital raising, allowing them to fund critical capital projects across the country,” he said.
The Nigerian market’s outlook is further bolstered by favorable global economic prospects, which Olayinka believes will positively influence investor sentiment and market activities.
However, he expressed concerns about the hurdles faced by banks attempting to raise capital, particularly due to delays in the allotment process caused by the Central Bank of Nigeria’s (CBN) capital verification exercise.
“It was unhealthy to keep the offer process on for more than three weeks after the closure of the application list,” Olayinka noted, adding that such delays could deter both local and foreign investors from participating in future public offerings.
The lengthy verification process has raised fears of potential investor apathy, especially among foreign portfolio investors who are accustomed to more efficient capital markets. To address this, Olayinka urged the CBN to adopt a more cautious and efficient approach to capital verification.
In light of these challenges, Olayinka predicted a rise in mergers and acquisitions within the financial sector as banks seek alternative strategies to meet regulatory capital requirements.
“Rather than endure the prolonged capital raising process, we may see more banks opting for mergers and acquisitions to strengthen their balance sheets,” he said.
Managing Director of Highcap Securities Limited said the Nigerian capital market is poised for a significant boost in 2025, driven by the continuation of banking recapitalization efforts and a series of anticipated public offerings.
Adonri speaking on the outlook of the capital market highlighted key factors expected to shape market performance in the coming year.
According to Adonri, the banking recapitalization initiative, combined with a resurgence of public offerings, will provide a much-needed boost to the primary market. “The positive impact of these activities will strengthen the primary market and drive greater investor participation,” he stated.
He further emphasized the role of manufacturing companies in driving market growth. “The refinancing efforts by some manufacturing firms and their recovery from foreign exchange losses are likely to enhance dividend yields, making equities more attractive to investors,” Adonri noted.
Macroeconomic factors are also expected to influence market performance. Adonri pointed out that a projected inflation rate of 15 per cent and a foreign exchange rate of N1,500 per US Dollar in 2025 could positively impact equities. These forecasts align with the growing confidence of both local and foreign investors in Nigeria’s economic prospects.
The ongoing banking recapitalization exercise has already garnered high enthusiasm among investors, supported by advanced public offerings technology that ensures efficient processes.
Adonri believes this combination, along with the current boom in the secondary market and improved investor confidence, will lead to the recapitalization initiative’s resounding success in 2025.
Managing Director/CEO of Arthur Stevens Asset Management Limited and former President of the Chartered Institute of Stockbrokers, Mr. Olatunde Amolegbe said the Nigerian capital market is expected to experience a year of relative stability in 2025, driven by increased infrastructure investments, improved macroeconomic conditions, and evolving fiscal policies.
Amolegbe, sharing his insights on the outlook for the year highlighted the Federal Government’s focus on infrastructure development as a key driver of economic activity.
“The 2025 budget places significant emphasis on infrastructure investment, and we are likely to see increased local and international borrowing to bridge the projected budget deficit,” he stated.
On the macroeconomic front, Amolegbe projected a gradual easing of inflation rates as food and energy prices stabilize. “If local production of these items continues to improve and internal security challenges are addressed, inflation could taper off. Lower inflation might lead to reduced interest rates, which would be a positive development for businesses,” he explained.
Regarding the capital market, Amolegbe anticipated continued growth in the All-Share Index (ASI), albeit at a moderated pace compared to 2024. “We expect the ASI to close positive in 2025, though it might not be as bullish as this year,” he noted.
Amolegbe also predicted a potential stabilization or reduction in interest rates by the second or third quarter of the year. On foreign exchange, he suggested that the naira could strengthen further, with exchange rates potentially nearing N1,550 to the US dollar by the third quarter of 2025.
“We look forward to a year of relative stability, with favorable conditions for businesses and investors,” Amolegbe concluded.
As Nigeria’s capital market gears up for another dynamic year, the interplay of policy reforms, economic recovery, and strategic investor engagement is expected to further cement its role as a key driver of economic growth and development.
Banking Recapitalization, Infrastructure Investments To Drive Market Performance In 2025 is first published on The Whistler Newspaper
