As of mid-February 2025, the Nigerian stock market, tracked by the All-Share Index, exhibits a promising upward trajectory, after a strong performance in the fourth quarter of the previous year.
Throughout 2024, the index achieved an impressive year-to-date increase of 37.7%, with a remarkable 39% surge in January alone.
However, this momentum encountered challenges in the second quarter of 2024, as the All-Share Index experienced a decline from 104,566.20 at the beginning of April to 98,255.63 by the month’s end.
Ultimately, the index closed the second quarter down by 4.3%, losing 4,508.71 points as uncertainties about bank recapitalization efforts weighed heavily on the market.
The first quarter of 2025 has thus far mirrored the bullish trend of Q1 2024, with the index climbing over 4,800 points and surpassing the 107,500-mark as of February 13, 2025.
Considering this, the question at hand is how the index will perform in the upcoming second quarter of 2025, especially given the retracements that plagued the same period last year. To navigate this uncertainty, insights from industry experts have been sought in this work.
Market trend in 2025 thus far
The All-Share Index is currently experiencing robust bullish momentum that began intensifying around December 2024 and continued into January 2025.
- Starting 2025 at 102,928.57, the index has closed six out of seven trading weeks in the green, surpassing the 105,000 and 106,000 thresholds.
- Despite a minor dip in the third week, when it fell from a weekly opening of 105,451.06 to 102,353.68, All-Share has since rebounded and broken the 107,000 barrier as of February 12, 2025.
However, certain technical indicators, including the Relative Strength Index and the Stochastic Oscillator, point to an overbought condition in the broader market, suggesting that a retracement or reversal could be on the horizon.
A shift from debt securities
In an interview, Samuel Oyekanmi, research lead at Norrenberger, expressed optimism for the Nigerian equities market, predicting a significant rise in investor interest in the second quarter which could spur a positive trend.
Oyekanmi explained, “As yields on debt securities decline, we may see more investors shifting their focus to equities.” He pointed out that although debt instruments are generally viewed as safer investments, the current decline in yields may prompt more investors to shift their focus toward equities.
He provided data from the Debt Management Office (DMO), highlighting that Nigeria’s Eurobond yield fell to 9.13% on February 4, 2025, down from 9.21% the previous day—a decrease of 7.76 basis points and the lowest yield seen in nearly 39 days.
“The last time we recorded a lower average was on December 11, 2024, at 9.095%,” he added.
Oyekanmi also pointed out a drop in Treasury bill yields, stating, “The yield on Nigeria’s one-year Treasury bill auction decreased from 29.65% to 29.21%, marking the second consecutive decline.”
He continued, “These lower yields may encourage more investment in equities during Q2, especially given the strong performance of certain stocks so far this year.”
Good fundamentals and a year-to-date lure
Another industry expert, Mr. Olatunde Amolegbe, MD/CEO of Arthur Steven Asset Management, expressed a positive outlook for the All-Share Index in the second quarter of 2025, suggesting the market may either stabilize or gain additional momentum.
“I anticipate a stable market or further price increases in Q2,” he remarked.
Amolegbe highlighted several favorable fundamental factors currently influencing the market, including rapid recapitalization in the banking sector and increased production in the oil industry.
He also noted the significant public interest in recent market offerings, signaling a growing appetite among investors for equities.
“The banking recapitalization process is progressing swiftly, as evidenced by the recent release of allotment results. Public offerings have attracted strong investor engagement,” he stated.
Regarding anticipated corporate announcements in Q2 2025, he added, “We may witness favorable corporate news that could positively impact investor sentiment.”
Samuel Oyekanmi further underscored that the impressive year-to-date performance of certain bullish stocks in 2024 could draw investors who previously favored debt securities into the equities market.
He pointed out that impressive year-to-date returns seen in some equities in 2024 are likely to entice investors eager to seize such lucrative opportunities.
“Despite the inherent risks, investors are in pursuit of substantial returns, which equities delivered last year with compelling year-to-date performance,” he concluded.
For Chris Njoku, Multi-Assets Portfolio Manager at FBNQuest, the prospect of new listings on the Nigerian Exchange (NGX) could boost the All-Share Index.
“There are possibilities that we might see some new listings in Q2, including NNPC and Dangote Refinery.”
Way forward
Looking ahead, the market shows a clear contrast.
- While indicators like the Relative Strength Index and Stochastic Oscillator signal an overbought condition, staying above the 14 threshold across daily, monthly, and weekly time frames, the Moving Average Convergence Divergence (MACD) points to a continued bullish trend for the All-Share Index.
This optimistic outlook, bolstered by strong market fundamentals and potential positive corporate actions, suggests the index might either surge significantly in the second quarter or remain stable.
Experts predict that investors not satisfied with returns from debt securities may increasingly shift to equities in Q2, especially if favorable conditions in key sectors like banking and oil continue.
As a result, equity markets could draw those seeking better returns, paving the way for notable investment developments.