Nigeria’s Financial Markets Show Resilience Amid Global Economic Uncertainty

Nigeria’s economy expanded by 3.13% in Q1 2025, surpassing last year’s 2.27% but falling short of the 4.9% forecast, highlighting persistent economic headwinds. Despite these challenges, the nation’s financial markets remain attractive for investors seeking short-term liquidity and long-term growth opportunities. Analysts note that Nigeria’s capital markets are adapting to global macroeconomic tremors while maintaining investor confidence through key reforms and technological integration.

Capital inflows surged to $5.64 billion between January and March 2025, marking a 67% year-on-year increase, with portfolio investments dominating at over 90% of total inflows. The Nigerian Exchange (NGX) reinforced this bullish outlook, as its All-Share Index jumped 5.07% to 141,263 points in early August, driving market capitalization to N89.4 trillion. Trading activity also climbed, with turnover rising 33% to N149.8 billion, fueled by gains in industrial and growth stocks.

Sectoral performance indicates services remain the backbone of economic activity, growing 4.33% and contributing over 57% of GDP, driven by telecoms and financial services. Manufacturing is witnessing renewed interest in agro-processing and consumer staples, while agriculture continues to act as a macro stabilizer. However, structural bottlenecks—such as low public investment at just 5% of GDP and infrastructure gaps—pose hurdles to President Tinubu’s ambitious goal of achieving 7% annual growth through 2027. Inflation eased slightly to 12.1% in July, offering some relief to policymakers.

Global factors continue to influence Nigeria’s investment landscape, with U.S. Federal Reserve tightening and crude oil price volatility shaping capital flows. As oil remains Nigeria’s primary foreign exchange earner, fluctuations in global demand and geopolitical tensions directly impact export revenues and investor sentiment. These dynamics underscore the need for strategic policy measures to shield domestic markets from external shocks while encouraging sustainable growth.

Despite global uncertainty, opportunities abound for traders and investors. Nigerian equities offer compelling value, particularly in well-performing sectors. The Central Bank’s exchange rate stabilization measures and reserve rebuilding efforts are further supporting market resilience. Additionally, the rise of digital trading platforms and tools—such as guaranteed stop losses and negative balance protection—is enhancing risk management for retail and institutional investors, positioning Nigeria as a dynamic frontier for capital growth.

Source: Nairametrics