Analysts forecast major transformations in capital market landscape for 2025
Onome Amuge
Financial analysts and industry experts predict that the year 2025 will bring a wave of transformative changes to the Nigerian capital market. A confluence of regulatory reforms, technological advancements, and macroeconomic factors are expected to drive this growth and innovation, creating new opportunities for businesses and investors alike.
As a major player in the Nigerian economy, the capital market has long been recognised as a powerful tool for mobilizing capital, nurturing investment opportunities, and fostering wealth creation for both individuals and businesses. In the coming years, these core functions are expected to expand and evolve, shaping the future of Nigeria’s economic landscape.
The Nigerian capital market reached new heights in 2024, with the NGX-ASI soaring by a staggering 36.25%, from 74,773.77 basis points in late 2023 to 101,129 basis points by December 2024. The growth was fueled by robust earnings from blue-chip companies and favourable government policies that helped drive market confidence and investor appetite.
The Nigerian Exchange (NGX) market capitalisation experienced a significant growth of over 50 percent, from N40.9 trillion in January 2024 to N61.3 trillion by December 2024. This remarkable rise was spurred by multiple factors, most notably the impact of new listings, such as Transcorp Power Plc, which added N1.8 trillion to the market’s overall value upon its listing.
Analysts anticipate that in 2025, Nigeria’s capital market will benefit from increased foreign investor participation, riding on the country’s expected stable macroeconomic environment and projected currency reforms. These positive trends are expected to boost Foreign Portfolio Investments (FPI), infusing the market with new capital and a deeper pool of investors.
In 2025, the planned launch of a dedicated SME board on the NGX promises to unlock fresh opportunities for small and medium enterprises (SMEs) by providing better access to public capital. This initiative is expected to foster a more diversified market base and spur business growth, as SMEs seek to tap into this new source of funding.
Meanwhile, sophisticated investors will welcome the rollout of new derivatives products, such as futures and options, which will expand their investment toolkit, enabling more effective hedging and risk management strategies.
The Securities and Exchange Commission’s (SEC) integration efforts under the West African Capital Markets Integration (WACMI) programme and opportunities from the African Continental Free Trade Agreement (AfCFTA), also stand to facilitate increased cross-border investment flows in 2025, opening up new avenues for capital markets cooperation and development across West Africa.
Meanwhile, Nigeria’s leadership in green finance is projected to continue, with an anticipated surge in green and sustainability-linked instruments being listed on the NGX Impact Board. This presents an opportunity for both domestic and international investors, as Environmental, Social and Governance (ESG) investing gains greater traction globally and efforts to combat climate change intensify.
Looking ahead to 2025, Olatunde Amolegbe, CEO of Arthur Stevens Asset Management, forecasts moderate growth for the NGX as the Nigerian government builds upon the success of its economic reforms, as evidenced by the recent EFEMS guidelines.
According to Amolegbe, this, coupled with anticipated exchange rate stability and improved macroeconomic conditions, is expected to attract increased Foreign Portfolio Investment inflows, boosting the capital market’s growth.
Amolegbe anticipates increased listings in emerging sectors such as renewable energy and technology, spurred by government policies supporting diversification and economic growth. He added that the growing focus on ESG factors is also expected to drive investor interest towards sustainable investments, especially as the NGX Impact Board expands its portfolio of sustainability instruments.
According to Amolegbe, the increased availability and usability of digital platforms and financial literacy campaigns are expected to expand the retail investor base in 2025.
The CEO of Arthur Stevens Asset Management further projected that the introduction of more retail-friendly instruments, such as Exchange Traded Funds (ETFs) and fractional shares, could further support this growth, making investments more accessible and appealing to a wider range of investors.