The Nigerian stock market has experienced an N4.43 trillion increase in the past two months as investors have placed their bets on blue-chip stocks

With the help of lower Treasury yields, investor optimism, and banker recapitalization, the NGX increased by N4.43 trillion in just two months.

As investors bought shares in blue-chip businesses during 2024 corporate earnings and dividend payouts, the Nigerian Exchange Limited’s (NGX) stock market segment saw a gain of N4.43 trillion in the first two months of 2025.

After the country’s inflation rate decreased, the Central Bank of Nigeria (CBN) drastically lowered interest rates on Treasury bills. This resulted in a spike in demand for certain listed businesses from investors, which was a major factor in the stock market’s N4.43 trillion rise during the time under review.

As players in the Treasury bill market had already started repricing yields downward despite the banking system’s tight liquidity conditions, observers had also expected a shift to the stock market.

After starting 2025 at N62.763 trillion, the stock market saw a gain of N4.43 trillion, or 7.1%, to close Friday at N67.19 trillion. This growth had an impact on the market’s performance in February 2025.

According to information obtained by THISDAY, the stock market had a gain of N1.95 trillion in January 2025 and an additional N2.48 trillion in February 2025, closing at N67.193 trillion.

The NGX All-Share Index (NGX ASI) thus saw a 4.76 percent or 4,894.99 increase in its Year-till-Date (YtD) performance, closing Friday at 107,821.39 basis points, up from the stock market’s closing price of 102,926.40 basis points in 2024.

Thisday’s analysis revealed that, among other things, investor expectations have increased due to the CNN’s 2024 corporate profits and the banking sector recapitalization exercise.

For instance, the NGX Banking Index outperformed other indexes in the first two months of 2025, closing Friday at 1,165.71 basis points after rising 7.5% year-to-date from 1,084.50 basis points.

On the other hand, investors have been cautious while making purchases on the stock market, particularly in the insurance and oil and gas subsectors.

When the NGX Oil/Gas Index opened trading at 2,712.06 basis points, it fell 5.54 percent year-to-date to close at 2,561.63 basis points, while the NGX Insurance Index down 0.24 percent year-to-date from 718 basis points to close at 716.28 basis points on Friday.

Capital market analysts have suggested that the stock price will continue to rise in March 2025 due to the reduced inflation rate, which was caused by the CPI rebasing, and the MPC’s decision to maintain rates at their current level.

The MPC’s decision to halt interest rate hikes may have a favorable impact on the local shares market, according to analysts at Corodroos Research, as investors weigh the possibility of policy easing in the medium run.

“We also anticipate a shift toward industries that are better positioned to grow in a lower-rate environment, especially manufacturing, as improved input cost dynamics, lower financing costs, and higher consumer demand boost growth prospects and increase the industry’s appeal to investors.”

Mr. Olatunde Amolegbe, Managing Director of Arthur Steven Asset Management Limited (ASAM), stated that fresh listings, projected monetary policy relaxation by the CBN, and ongoing bank recapitalization operations are the main drivers of the stock market’s growth in 2025.

Nigeria’s relative market attractiveness, as long as stable policies are upheld, is a major element in luring more foreign direct investment, according to Amolegbe.

According to him, the process of bank recapitalization is anticipated to increase investor trust, while prominent listings like Dangote Refinery and Nigerian National Petroleum Company Limited are anticipated to improve market liquidity and expand investment prospects.

Investor positioning ahead of 2024 fiscal year results and dividend announcements, especially in the banking industry, is the reason for the anticipated optimistic trend in 2025.

The market’s performance, Amolegbe warned, will be influenced by important variables like the nation’s economic growth trajectory, the direction of monetary policy, and company profits reports.