Operators list ways to unlock stock market potential, sustain 2024 growth

Operators have stressed the need for policymakers and regulators to work together to create a stable, transparent and investor-friendly environment that would help sustain the current growth trajectory in the Nigerian stock market and unlock its full potential in 2025.

Indeed, the Nigerian Exchange Limited (NGX) has been one of the standout performers in Africa’s financial markets, recording an impressive 37 per cent year-to-date (YTD) gain so far in 2024.

This remarkable achievement reflects the resilience of Nigeria’s capital market despite a challenging global and local economic environment. With this unprecedented rebound witnessed in the nation’s bourse this year, culminating to a year-to-date increase in market capitalisation by N21 trillion, the operators argued that sustaining this growth in 2025 will require deliberate and coordinated actions from policymakers, regulators, and market participants.

The operators, while speaking on the performance of the market in 2024 and how to achieve a sustainable rebound, stated that several factors could negatively impact the sustainable growth of the NGX in 2025.

As of December 27, 2024, the NGX market capitalisation stood at N61. 912 trillion, representing N21 trillion or 33.3 per cent gain from N40.918 trillion at which it reopened for transactions on January 2, 2024.

Also, the total transaction value reached an impressive N4.91 trillion by the end of November 2024, reflecting a significant 51.9 per cent YTD increase from N3.23 trillion recorded in November 2023. This marks a new historic peak, surpassing the previous high of N3.97 trillion recorded in 2007.

According to the operators, while the NGX has demonstrated resilience and growth potential, addressing these challenges is crucial to ensuring its sustainable development in 2025.

They stated categorically that these factors, if not addressed, may undermine investor confidence, limit market liquidity and slow the overall growth trajectory.

Vice President of Highcap Securities Limited, David Adonri, said the equities market is expected to boom in 2025 both in the primary and secondary markets while corporate recovery by major companies that suffered FX losses will positively impact the secondary market for equities in 2025.

However, he stated, these could only be achieved if the projection of a 15 per cent inflation rate is pursued vigorously and achieved. The current management of the Central Bank of Nigeria (CBN) Monetary Policy Committee (MPC) has implemented six interest rate hikes to end inflation, which currently stands at 34.6 per cent.

The first increase raised the rate from 18.75 per cent to 22.75 per cent, followed by subsequent hikes to 24.75 per cent and 26.25 per cent. Similarly, in July 2024, a 50-basis point increase brought the rate to 26.75 per cent. Also in September, the MPC implemented another 50-basis point hike, raising the rate to 27.25 per cent.

In November 2024, the CBN raised its interest rate again, increasing it by 25 basis points from 27.25 per cent to 27.50.per cent. Adonri noted that elevated inflation rates would continue to erode purchasing power, reduce savings, and lower overall investment inflows into the stock market while tight monetary policies to combat inflation could make fixed-income instruments more attractive, diverting funds away from equities.

President of the Independent Shareholders Association of Nigeria, Moses Igbrude said for the NGX to solidify its position as a leading exchange in Africa, providing a platform for wealth creation and economic development in Nigeria, macroeconomic uncertainty, especially the issue of persistent inflation, exchange rate volatility, and high borrowing costs must be tackled head-on.

According to him, deepening market liquidity through encouraging retail participation, increasing financial literacy campaigns and simplifying access to trading platforms would attract more retail investors.

He also urged regulators to strengthen policies that promote pension funds, insurance companies, and mutual funds’ participation to boost market liquidity.

A cursory look at the share price performance of various companies on the exchange showed that virtually all the stocks outperformed the All-share index as at the close of transactions on December 27, 2024.

For instance, Juli Pharmacy which stood at 59 kobo as of December 2023 appreciated by 1646.0 per cent to close at N10.30 kobo on December 27, 2024. Similarly, Sunu Assurance rose by 717 per cent from N1.10 kobo to N899 kobo. For Oando Plc, the stock closed at N67.35 kobo, from N10. 59 kobo in 2023, adding 541 per cent.

Conoil, RT Briscoe, Veritas Kapital and Tantalizers garnered 362 per cent, 310 per cent, 289 per cent and 266 per cent from N83.90 kobo, N61 kobo, 37 kobo and 47 kobo to N387.20 kobo, N2.50 kobo, N1.44 kobo and N1.72 kobo.

Julius Berger closed at N155.25 kobo from N43 kobo in 2023, representing a 261 per cent gain. JohnHolt and Geregu appreciated by 206 per cent and 188 per cent from N2.32 and N399 to N7.09 kobo and N1,150.

IMG also hit N37.95 kobo from N13.45 kobo in 2023, adding 182 per cent. This performance indicates robust investors’ interest and positive market sentiments towards these equities.

An independent investor, Amaechi Egbo said despite the impressive gains, several challenges could hinder the NGX’s growth trajectory in 2025. He appealed to the federal government to consider the age-long plan to encourage multinational companies to list on the NGX to deepen the market and enhance liquidity in the medium and long term.

He said there is a need to ensure a more investor-friendly business terrain to boost the operations of micro, small and medium scale Enterprises to flourish, adding that the capital market must be developed to assist local entrepreneurs in growing their businesses.