By Barnabas Esiet.
The Nigerian stock market is expected to experience significant growth in 2025, with Arthur Steven Asset Management Limited (ASAM) forecasting a 39% return on the All-Share Index (ASI).
This optimistic projection is underpinned by ongoing bank recapitalization efforts, new equity listings, and anticipated monetary policy easing by the Central Bank of Nigeria (CBN).
According to Olatunde Amolegbe, Managing Director of ASAM and former President of the Chartered Institute of Stockbrokers (CIS), the Nigerian stock market offers a compelling investment opportunity, driven by its relative market attractiveness and potential for increased foreign portfolio inflows (FPI).
Amolegbe, who was speaking at a forum organised in Lagos by the Capital Market Correspondents Association of Nigeria (CAMCAN), emphasized the importance of maintaining stable policies to attract and retain foreign investors.
The bank recapitalization process, currently underway, is expected to boost investor confidence and enhance the overall stability of the financial system.
This, in turn, is likely to drive growth in the banking sector, with investors positioning themselves ahead of 2024 fiscal year results and dividend declarations.
New equity listings, such as the highly anticipated listing of Dangote Refinery, are expected to enhance market liquidity and broaden investment opportunities. This influx of new listings is likely to attract increased investor interest and participation in the market.
ASAM’s projection of a 39% return on the ASI is based on a comprehensive analysis of market trends, economic indicators, and policy developments.
While the market’s performance will depend on critical factors such as economic growth, monetary policy direction, and corporate earnings results, the overall outlook for 2025 remains optimistic.
– Shift towards Equities Expected
As fixed-income yields decline, driven by the CBN’s likely adoption of a more accommodative monetary stance, ASAM anticipates a shift towards equities.
This shift is expected to be driven by investors seeking higher returns and diversification in their portfolios.
Conservative sectors such as banking, consumer goods, and industrials are expected to perform well, offering steady returns for investors.
These sectors are likely to benefit from improved economic conditions, including lower inflation and a more stable foreign exchange environment.
– Palm Oil Industry Expected to Drive Growth
The palm oil industry is expected to experience robust growth in 2025, driven by sustained global demand, rising prices, and improved production volumes. Key players such as Okomu Oil Palm Company (OKOMUOIL) and Presco Plc are expected to drive growth in the sector, with expected returns ranging between 18% and 25%.
Presco’s recent bond issuance to fund its acquisition of Ghana Oil Palm Development Company Limited is seen as a strategic move that further solidifies its growth prospects.
This acquisition is expected to enhance Presco’s production capacity, improve its competitiveness, and drive growth in the sector.
– Consumer Goods Sector Set for Rebound
The consumer goods sector is expected to recover from the inflationary challenges of 2024, driven by expectations of lower inflation, a more stable foreign exchange environment, and supportive government policies.
Proposed tax modifications in the Economic Stabilization Bill, along with access to trade credit facilities, are expected to foster a favorable business climate.
Additionally, ongoing efforts by the CBN to narrow the gap between official and parallel exchange rates are likely to improve access to foreign exchange, benefiting companies in the consumer goods sector.
The 2025 outlook for the Nigerian stock market remains optimistic, bolstered by strategic reforms, policy adjustments, and improving investor confidence.
While challenges such as exchange rate instability and inflation persist, key sectors are positioned to drive market performance and deliver strong returns for investors.
As the market continues to evolve, it is essential for investors to remain informed and adapt to changing market conditions.
With the right investment strategy and a long-term perspective, investors can capitalize on the growth opportunities presented by the Nigerian stock market in 2025.
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