Nigerian Stocks Set to Soar 32% in 2025 on Tax Cuts, FX Reforms – Report

With projections indicating a 32.2% return, according to CardinalStone Research’s 2025 Mid-Year Economic Outlook. The bullish forecast is underpinned by a mix of government-led tax reforms, easing inflation, and improving foreign exchange conditions. Central to this optimism is the reduction in Corporate Income Tax (CIT) from 30% to 25%, a move expected to boost corporate profitability and dividend payouts.

Factoring in dividend yield, earnings growth, inflation, and valuation reversion. It found that Nigerian equities offer a risk-adjusted return of 14.5% and an expected return-per-risk ratio of 1.82 — significantly higher than those of peer African markets. Additional relief, such as VAT exemptions for essential inputs and transport, is expected to reduce production and distribution costs across industries.

Nigeria’s GDP is forecast to grow by 4.1% in 2025, up from 3.4% in 2024, while inflation is projected to drop to 20% from the previous year’s 33% average. These improvements, alongside a possible interest rate cut of up to 100 basis points, are expected to lower borrowing costs and attract more investors into the equities market.

With inflows hitting $8.05 billion in just the first half of 2025 — nearly matching the entire 2024 total. This trend is driven by investor confidence in Nigeria’s macroeconomic stability and global positioning. Key sectors like upstream oil and gas, consumer goods, banking, and telecoms are expected to benefit the most, with firms like SEPLAT, GTCO, Zenith Bank, Nestlé, and MTNN seen as top performers.

In banking, despite short-term regulatory constraints, recapitalisation is expected to boost long-term performance. Consumer goods firms are set for a recovery thanks to improved FX stability, while telcos benefit from tariff adjustments and new contracts. With macro and sectoral improvements aligning, CardinalStone concludes that Nigerian equities are primed for strong gains in 2025.

Source: The sun