BREAKING: Amid Economic Reforms, Nigeria’s Equities Market Grew By N3.48tn In Q1
The Nigerian Exchange Limited (NGX) ended the first quarter of 2025 on a positive trajectory, with the All-Share Index (ASI) posting a year-to-date (YTD) return of 2.7 per cent, underscoring the resilience and potential of the equities market despite prevailing economic challenges.
The ASI closed at 105,660.64 points as of March 28, 2025, reflecting a gain from 102,926.40 points recorded at the start of the year.
This performance was driven by renewed investor confidence, strategic corporate actions, and favourable government policies that bolstered market sentiment.
However, a two per cent decline in March tempered overall gains, largely due to uncertainty in the banking sector surrounding the delayed release of full-year financial results.
A major factor underpinning the stock market’s performance was the surge in capital-raising activities by financial institutions.
This follows the Central Bank of Nigeria’s (CBN) revised capital requirements that commenced in 2024, which mandated N500bn for internationally authorised banks and N200bn for national banks, financial institutions engaged in public offers, rights issues, private placements, and listings by introduction to meet regulatory thresholds and strengthen their balance sheets.
The declining yields in the money market also played a pivotal role in shifting investor focus toward equities. Compared to 2024, returns on fixed-income instruments were less attractive, prompting discerning investors to seek higher yields in the stock market.
Additionally, favourable policy reforms by the federal government and a stable regulatory environment created a strong backdrop for market activities, attracting both domestic and foreign investors.
Despite economic concerns such as inflationary pressures, currency depreciation, and security challenges, the equities market demonstrated resilience.
According to data obtained by THE WHISTLER, the All-Share Index (ASI), which serves as a key barometer of the performance of Nigerian stocks, opened the year at 102,926.40 points on January 2 and closed at 105,660.64 points on March 28th. This reflects a substantial gain of 2,734.24 basis points, translating to a year-to-date (YTD) growth of 2.7 per cent.
Market capitalisation, which measures the total value of listed stocks, increased from N62.763tn at the beginning of the year to N66.257 trillion by the end of Q1, reflecting a YTD gain of approximately N3.48tn.
Financial experts agreed that the Nigerian equities market showed remarkable resilience in Q1 2025, despite the temporary setback in March.
Managing Director of Highcap Securities Limited, Mr. David Adonri, in an exclusive interview with THE WHISTLER, attributed the market’s March downturn to the delayed release of audited full-year financial results from key banks.
According to Adonri, the equities market showed resilience in the early part of the quarter, supported by renewed investor interest and improved macroeconomic fundamentals.
However, the market’s performance was dampened towards the end of the quarter, following a two per cent decline recorded in March.
He attributed the downturn in March to uncertainties emanating from the banking sector, particularly regarding the delay in the release of banks’ audited full-year financial results for 2024.
“The postponement of the banks’ results created an atmosphere of apprehension among investors, which triggered bearish sentiments and negatively impacted market performance,” Adonri explained.
While the eventual release of the banking sector’s financial results in the last week of March revealed impressive earnings, Adonri noted that the late disclosure did little to reverse the negative trend already established in the market.
Speaking on the market’s performance, Managing Director of Globalview Capital Limited, Mr. Aruna Kebira, highlighted the significance of the drop in inflation, which stood at 23.18 per cent in the latest report, compared to 24.48 per cent previously.
He noted that this decline provided capital market investors with much-needed relief and improved sentiment throughout the quarter.
At the same time, the declining yields in the money market played a crucial role in redirecting investor interest toward equities.
According to Kebira, money market instruments were no longer as attractive as they were in 2024, prompting discerning investors to seek higher returns in the stock market.
He also pointed out that the Monetary Policy Committee (MPC) decided to retain the Monetary Policy Rate (MPR) and other key financial metrics in its last meeting.
This move, he explained, signalled the possibility of a future downward adjustment in the MPR, especially as inflation and money market yields continued to decline. Such an adjustment, he noted, would be less favourable for fixed-income investments but could further stimulate interest in equities.
Another significant driver of market optimism, he noted, was the release of both unaudited and audited financial statements by listed companies, with nearly 80 percent of the reports reflecting strong corporate performance.
Kebira emphasised that quality dividend declarations further reinforced investor confidence, particularly in the banking sector, where institutions demonstrated resilience and exceeded expectations in their shareholder rewards.
He cited the impressive final dividend payouts from leading banks, with Zenith Bank declaring N4.00 per share, United Bank for Africa (UBA) announcing N3.00 per share, and Guaranty Trust Holding Company (GTCO) leading the way with a N7.03 final dividend per share.
However, Head of Research and Investment at FSL Securities Limited, Mr. Victor Chiazor, said the Nigerian equities market has experienced a significant slowdown in the first quarter of 2025, failing to match the impressive performance recorded in the same period of 2024.
According to Chiazor, the market delivered a return of just 2.66% in Q1 2025, a stark contrast to the robust 39.84 per cent gain reported in Q1 2024.
He attributed this decline to investors’ cautious approach, as many have opted to either stay on the sidelines or shift their focus to the fixed-income market, where yields have remained relatively attractive.
“We believe that 2024 was an exciting year for investors in the equities market, with notable incentives such as impressive bonus offerings, dividend payouts, and public offerings, all of which spurred investor participation and profit-taking,” Chiazor noted.
However, he pointed out that concerns over the market’s ability to sustain such high returns in 2025 have led to increased caution among investors.
One of the key factors contributing to this sentiment is the rise in the number of issued shares for several companies following last year’s public offers.
The dilution effect of these new issuances may have tempered expectations for continued rapid price appreciation.
Market analysts suggest that unless new growth drivers emerge, investor sentiment may remain subdued in the equities segment, with many preferring the stability of fixed-income investments amid a high-yield environment.
Despite the sluggish start to the year, market watchers remain hopeful that economic policies, corporate earnings reports, and macroeconomic conditions will shape investor confidence in the coming months.
As the second quarter begins, market analysts anticipate sustained momentum, supported by corporate earnings, evolving macroeconomic policies, and potential monetary policy adjustments. Investors are expected to closely monitor developments in the financial sector, as well as regulatory decisions that could influence market direction.
With an improving inflation outlook, continued capital-raising activities, and increasing investor participation, the Nigerian equities market remains positioned for further growth in the months ahead.
