Market Flexibility and FX Stability Power Nigeria’s Capital Market Rally in 2025
Nigeria’s capital market entered a defining chapter in 2025, posting one of its most impressive performances in recent history as policy reforms, foreign exchange stability and easing inflation combined to restore investor confidence. Data from the Nigerian Exchange (NGX) shows the All-Share Index (ASI) surged by about 49.17 per cent year-to-date, rising from 102,926.40 points at the end of 2024 to 153,539.83 points by December 24, marking the sixth consecutive year of positive returns and cementing a sustained multi-year bull run.
In absolute terms, the market added over 50,600 points in 2025—one of the largest single-year gains since the exchange was automated—translating to average monthly returns of more than 4 per cent, well above long-term trends. Market capitalization expanded sharply from ₦62.76 trillion to nearly ₦97.9 trillion, positioning the NGX among Africa’s best-performing stock markets. Trading activity also surged, with total equity turnover crossing 1.85 trillion shares valued at ₦21.6 trillion, reflecting renewed domestic participation and a strong rebound in foreign portfolio investments.
Analysts attribute the rally largely to wide-ranging economic reforms under the Tinubu administration, including exchange-rate unification, banking sector recapitalisation and the enactment of the Investments and Securities Act (ISA) 2025. Although the year opened with volatility following subsidy removals and FX adjustments, inflation eased steadily from a peak of about 34 per cent early in the year to 14.45 per cent by November. FX stability followed, with the naira settling around ₦1,450 to the dollar, helping attract foreign inflows that more than doubled to over ₦2.1 trillion in 2025.
The market’s journey through the year was not without interruptions. Mid-year profit-taking and policy concerns triggered temporary pullbacks, while tax reform debates sparked a sharp correction in November that erased an estimated ₦6.2 trillion in market value. However, clarity from government officials—who assured that over 99 per cent of retail investors would be exempt from capital gains tax—helped calm sentiment, paving the way for a strong December rally that recovered most of the losses within weeks.
Sectoral performance was largely positive, led by consumer goods, industrial stocks and banking shares, with standout gains in select equities and renewed momentum from bank capital-raising exercises. Looking ahead to 2026, market watchers expect reforms, FX stability and new listings to continue supporting growth, even as risks from global uncertainty and fiscal pressures remain. For now, 2025 stands out as a landmark year in Nigeria’s capital market evolution—one that underscored how flexibility, stability and policy clarity can unlock sustained investor confidence.
source: The sun