The NGX general market index leaped by 37.6% in 2024, with all the sectoral indices recording gains. The market has been on a bullish run for the past two years (44% in 2023, and 37.6% in 2024); we have also recorded 5 straight years of market growth (2020, 2021, 2022, 2023, and 2024). The rally in the market in the last 2 years is largely attributable to regime change and a new government that embraced market reforms.

While we do not have a crystal ball to give an accurate prediction of how the market will fare in 2025, we do think that the key factors that will drive market performance during the new year are summarized below:

a. From the economic perspective, we anticipate that real GDP growth will range between 3.2%- 3.4%; the inflation rate will start to fall in Q2 2025 due to the base year effect (high inflation rate in 2024); the interest rate will remain elevated in 2025, with the possibility of falling interest rates from the last quarter of 2025; the CBN has found a temporary solution to Nigeria’s FX problem, with the exchange rate expected to be stable in 2025 due to rising FX reserves (now over USD 40 billion) and the full takeoff of the Dangote refinery.

b. From an international perspective, falling inflation rates will drive lower interest rates in the United States and Europe, which may trigger foreign capital flow to emerging markets like Nigeria in search of alpha. These positive signs will feed into the market in 2025.

c. The Planned listing of Dangote Refinery. This will be the largest listing ever done in the Nigerian capital market. The stock will be representing about 33% of the NGX market capitalization, with a surge in the stock capable of dictating the direction of the entire market during the year. It will also become the major driver of the NGX oil and gas index.

d. We anticipate a price correction in the banking sector because investors will likely be disappointed with the payment of dividends by the banks. The real impact of the 75% tax on foreign exchange gains made by the banks in the 2023/2024 financial years will be seen when the banks are compelled to make such payments to the FIRS, as their tax liability will increase significantly. Secondly, the banks were mandated to raise additional equity capital in 2024, which made them issue so much new shares that will rank paripassu with existing shares and also qualify for dividends. Many investors will be shocked when the final dividend payment fails to meet expectations. Thirdly, since the conclusion of the capital raise by the banks in 2024, their share price has been on an upward surge; we will see a price correction when the new shares are listed in 2025.

e. Consumer Goods stocks that have suffered over the last two years will record significant improvement in 2025, as there will be no more FX losses due to the stability of the naira. So, from Q1’2025, we expect to start seeing profits in Nestle, Guinness, Nigerian Breweries, Cadbury, and Dangote Sugar. We also anticipate that the planned merger between Dangote Sugar and Nascon will pull through in 2025.

f. The industrial goods sector will see WAPCO being delisted from the exchange as the acquisition and subsequent delisting of the company will take place in 2025. Dangote Cement will record some price correction as investors will continue to sell until its dividend and earnings yield align with the trend for listed companies in the market. The focus of Africa’s richest man – Aliko Dangote will shift to his listed refinery business.

g. The Insurance sector will see significant attention in 2025 as firms in the sector battle to raise capital to meet the revised capital base for insurance companies in Nigeria. An upward surge in the prices of most insurance companies was seen in 2024; it is expected to continue in 2025. Unlike the distant past, when good performance in the sector was limited to Custodian, Mansard, and NEM insurance, almost all insurance firms are posting decent results now. However, the market will pass its judgment on the sector based on their ability to back up their growth in profit with a strong dividend payout.

h. In the telecom sector, we expect the Nigerian Communications Commission to approve the planned revision of tariffs for the telecom sector, which will see calls, SMS, and data costs rise by as much as 40%. Since pricing for other sectors of the economy has at least doubled since the takeoff of Tinubu’s administration, it has impacted heavily on the operating cost of the firms in the telecom sector, with MTN making huge financial losses. When this approval comes in 2025, MTN will revert to profitability and will be appropriately priced by the market.

i. In the Agricultural sector, we expect Okomu Oil and Presco to continue to delight the market with strong performance. Ellahlakes is expected to start reporting revenue in 2025.

Paul Uzum (PhD, FCS, ACCA) is an Executive Director; Halo Nigeria Capital Management Limited. He is a fellow of the Chartered Institute of Stockbrokers and an Authorized Dealing Clerk of the NGX.