From Caution to Confidence, Nigeria’s Stock Market Sustains Rally

Obinna Chima

The Nigerian stock market is gradually emerging as one of the most compelling stories of resilience and renewed optimism in the country’s economic narrative in 2025, as the first eight months of the year have signalled a sharp turnaround. 

Confidence has replaced caution, resulting in a bullish trend that has captured the attention of both local and foreign investors. Indeed, the stock market is a mirror of expectations about the broader economy, and smart investors do what the rest of the crowd is not doing.

Precisely, the market capitalisation of the Nigerian Exchange Group (NGX), which stood at N62,763,276,924,058 as at December 31, 2024, has so far increased by N28,738,440,324,013 or 45 percent to N91,501,717,248,071.38 yesterday.

Similarly, the All-Share Index of the Nigerian bourse has advanced by 40.5 percent in the past eight months, from 102,926.40 as at December 31, 2024, to 144,628.20 yesterday.

In terms of sectoral performance, for the banking stocks, equities such as Wema Bank have given investors reasons to smile as it has appreciated by 150 percent, from N9.1 per share on the last trading day of 2025, to N22.75 per share yesterday. Similarly, while Stanbic IBTC’s shares, which stood at N57.6 per share at the end of 2024, closed at N111 per share yesterday; GTCO from N57 per share at the end of 2024, to N97.7 per share yesterday.

In the insurance sector, for instance, while AIICO Insurance share price has so far appreciated by 62 per cent, from N1.43 per share at the end of 2024, to N3.80 per share yesterday, AXA Mansard also appreciated from N8.2 per share at the end of 2024, to N16.75 per share as at yesterday, showing a 51 per cent appreciation since this year.

In the Foods sub-sector, while BUA Foods Plc has recorded a 42 percent year-to-date growth from N415 per share at the end of 2024, to N588 per share yesterday, Honeywell Flour Mills Plc has recorded tremendous growth, moving from N6.3 per share at the end of 2024, to N22.70 per share yesterday; NASCON Allied Industries Plc advanced in the past eight months to N90.5 per share yesterday, from N31.35 per share at the end of 2024, and Dangote Sugar Refinery Plc’s share price has also appreciated from N32.5 per share at the end of 2024, to N55.95 per share yesterday.

Equally, in the Cement sector, BUA Cement has also gained a remarkable 82 per cent, from N93 per share at the end of the year, to N168.6 per share yesterday and Dangote Cement Plc has also climbed by 20.5 per cent to N577 per share yesterday, from N478.8 per share at the end of 2024.

At the start of the year, few would have predicted the scale of the rally we are now witnessing because of the elevated inflation rate, high interest rate, and the naira still adjusting to the effects of foreign exchange reforms. 

Banking stocks, buoyed by stronger earnings and recapitalisation plans, have been one of the major drivers. The financial sector, traditionally the heartbeat of the Exchange, has attracted significant inflows, as investors bet on their resilience in the face of regulatory reforms and rising profitability. While few of the banks have scaled the ongoing recapitalisation hurdle, several of the financial institutions are in the second phase and are in the race to beat the March 2026 deadline. The exercise is expected not only to strengthen the balance sheets of the banks, but also to reinforce stock market activity. 

Insurance stocks, aided by the Nigerian Insurance Industry Reform Act (NIIRA) 2025, recently signed into law by President Bola Tinubu, have also contributed to the strong rally on the stock market.

The NIIRA 2025 repealed and consolidated several outdated insurance laws into a single, modern legal framework. The new Act, a landmark legislation that strengthens Nigeria’s financial sector also provides for comprehensive regulation and supervision of all insurance and reinsurance businesses operating within Nigeria. Activities in the insurance sector are expected to be propelled further with yesterday’s announcement of a fresh recapitalisation exercise for the industry by the National Insurance Commission.

Clearly, the market has proven that equities thrive not only on ideal conditions but on the perception of future gains, stability, and credible reforms. The roots of this renewed investor confidence can be traced to a mix of policy consistency, macroeconomic recalibration, and corporate resilience. While Nigeria still faces significant challenges, particularly in security, infrastructure, and cost-of-living pressures, the government’s reforms in the monetary and fiscal space have reassured many that there is a commitment to stabilisation. 

The Olayemi Cardoso-led Central Bank of Nigeria (CBN) has taken a more transparent approach to monetary policy, narrowing the gap between official and parallel exchange rates, while tightening measures to rein in inflation. These actions have not gone unnoticed by investors who, for years, viewed policy inconsistency as one of the greatest risks to Nigerian equities.

Foreign portfolio investors, long skeptical of the repatriation bottlenecks and currency instability, are beginning to test the waters again as in the first quarter of 2025, the country recorded a total capital importation of $5.642 billion.

Local institutional investors, such as pension funds and asset managers, have also increased their equity exposure, driven by the need to hedge against inflation and take advantage of rising corporate earnings. Retail investors have also played their part in broadening participation.

The psychological shift in the market is perhaps the most important development of all. For years, Nigerian equities were viewed with a sense of caution. Now, that narrative is being rewritten. Investors are once again willing to take calculated risks, reassured by the sense that government and corporate actions are aligned towards stability and growth. 

It would be misleading, however, to suggest that all is rosy. Risks remain, and they are not insignificant. The country still faces numerous macroeconomic challenges.

Therefore, in order to take advantage of the opportunities offered by the current trend in the stock market, potential investors must remain cautious and take out time to understand what they are investing in. 

Additionally, investors must understand that the stock market is not a casino and should not be looked at from a short-term view. This is because history has shown that investors who go into the stock market without understanding what it is all about get their fingers burnt.

Most importantly, stock market investors must understand the behaviour of different stocks and sub-sectors on the NGX so that stockbrokers who are always out to get their commission do not mislead them into buying ‘dead’ stocks, as there are specific seasons and dispensation of different stocks and sub-sectors.

To this end, Michael Sheimo, in his book, “Stock Market Rules,” warns that, “People should at least spend as much time selecting a stock as they do when buying a new refrigerator.”

“The research is extremely important, so that the investor doesn’t just buy the glitzy presentation of a particular business. Select stocks with good-looking fundamentals, reasonable prices and a fast-looking future. Buy the stock and watch the new developments,” he adds.

Likewise, in his book, ‘Market Panic – Wild Gyrations, Risks and Opportunities in Stock Markets’, Stephen Vines stresses the importance of investors being disciplined while in the market, saying “they should set targets for the profits they wish to achieve and set targets for the toleration of loss.”

“Discipline in setting targets and keeping them is especially important in fast-rising markets because they float on a wave of exaggerated expectations, leading investors to delay selling in the hope of securing dazzling gains,” he adds.