Unstoppable Momentum: Nigeria’s Market Outpaces Inflation And The Past

Unstoppable Momentum: Nigeria’s Market Outpaces Inflation And The Past

LAGOS – Despite a slight dip of 0.2% on the final trading day of 2024, the Nigerian Stock Exchange (NGX) concluded the year with an impressive 37.65% growth, closing at 102,926.40bps. This robust performance has allowed the market to stay ahead of inflation, which….Unstoppable Momentum: Nigeria’s Market Outpaces Inflation And The Past

stood at 34.60% as of November, ensuring real returns for investors.

Analysts from Afrinvest Research predict inflation could ease to around 34.5% by December, while experts from Bismarck Rewane’s Financial Derivatives anticipate a 35% rate. This surge in stock prices represents a significant turnaround for the NGX, which has struggled since the aftermath of the 2015 oil price crash and the 2016 recession.

The Nigerian market has seen unprecedented growth since 2020, with the benchmark index skyrocketing by 283.45%, from 26,842.07bps in 2019 to 102,926.40bps at the close of 2024. Standout years, including 2020, 2023, and 2024, marked a period where investors, seeking higher returns, flocked to equities amid negative yields in the fixed-income markets.

The market capitalization has also experienced remarkable growth, increasing from N12.79 trillion at the end of 2019 to a staggering N62.76 trillion by December 31, 2024—an incredible rise of nearly N50 trillion.

Key listings such as Geregu Power Plc, Transcorp Power Plc, Aradel Holdings, and BUA Foods have contributed significantly to this upward trajectory. Additionally, Nigerian Breweries’ rights issue raised nearly 21 billion shares, further energizing the market.

The surge in foreign capital inflows has also played a role, rising from just 4% in mid-2023 to an average of 16% by November 2024. The depreciation of the naira, driven by macroeconomic reforms, has sparked this wave of foreign interest.

At the closing ceremony, NGX CEO, Jude Chiemeka, acknowledged the significant activity in the market, crediting supportive macroeconomic fundamentals, policy reforms from the Central Bank of Nigeria (CBN), and effective oversight by the Securities and Exchange Commission (SEC).

Despite the positive outlook, challenges remain. Proshare Nigeria analysts highlighted concerns such as high transaction costs, low trading volumes, and liquidity constraints. However, they suggested that the listing of national assets like NNPC Limited could unlock greater liquidity and attract domestic and foreign investments.

Looking ahead, Coronation Asset Management predicts a more stable 2025 for the Nigerian economy. They point to recent policy shifts by the Federal Government and monetary authorities to curb inflation and stabilize the currency. However, inflationary pressures and the devaluation of the naira will require patience.

Temi Popoola, Group Managing Director of Nigerian Exchange Group, emphasized that the stock market has become a resilient hub, offering valuable opportunities for investors. He noted that recent policy reforms, particularly in the oil and gas sectors and the liberalization of exchange rates, have greatly enhanced operational efficiency.

As 2025 approaches, there is optimism that continued reforms and a stable macroeconomic environment will fuel sustained growth, boost liquidity, and increase investor confidence in the Nigerian market.

For More Information And News Update, Join Ireporteronline WhatsApp Channel With Link Below: https://whatsapp.com/channel/0029VaV4jB6DuMRgwqnJCF32 For advertisement inquiries only, kindly send a message to 09010649814 on Whatsapp