Nigerian Capital Markets Q1 2025 Review: Resilience Amid Market Shifts and Economic Headwinds

The Nigerian Exchange Limited’s (NGX) All-Share Index (ASI) showed resilience in the first quarter of 2025, recording a year-to-date (YTD) gain of 2.66% amidst broader negative market sentiment, particularly in March. The index rose from 102,926.40 points on December 31, 2024, to 105,660.64 points as of March 28, 2025. In January, the NGX ASI increased by 1.53%, rising from 102,926.40 to 104,496.12 points. February saw a more substantial gain of 3.09%, closing at 107,723.22 points. However, in March, the index dropped 1.91%, bringing the index down to 105,660.64 points as of the end of the first quarter of 2025. Despite the minor correction, the overall market performance in Q1 remained positive, reflecting investor confidence and sectoral resilience.

The sectoral performance in Q1 2025 reflected mixed sentiments, shaped by evolving market and macroeconomic events. The CBN-led banking sector recapitalisation sparked heightened investor interest in banking stocks, leading to a 6.96% increase in Q1 2025. During this period, banks collectively raised approximately N2.4trn in fresh capital, reinforcing market confidence and driving sectoral growth. This has driven a rally in the sector and contributed to the broader market uptrend, as most banks are currently in the second phase of their recapitalisation plans. Notably, major banks reinforced investor confidence through strong dividend declarations, with ZENITHBANK announcing N4.00 per share, UBA declaring N3.00 per share, and GTCO proposing N8.03 per share.

Nigerian Capital Markets Q1 2025.

Also, the moderation in inflation to 23.18% in February 2025, down from 24.48% in January 2025 and 34.8% in December 2024, provided a supportive macroeconomic backdrop, further bolstering investor sentiment

Despite the market pullback in March, Proshare analysts remain cautiously optimistic about the outlook for Q2 2025. Key factors expected to drive sustained market momentum include continued strong dividend payouts, greater clarity on banking recapitalisation, and easing inflationary pressures.

However, several risk factors could impact market performance in the coming months. Monetary policy adjustments by the CBN, particularly in response to inflation and exchange rate stability, could influence investor sentiment. External economic conditions, such as tariff policies and advancements in technological innovation, may have significant implications, especially for the consumer goods sector. Additionally, energy transition policies could significantly reshape market dynamics, affecting industries that rely heavily on fossil fuels.

Furthermore, government policies and foreign trade agreements may alter household spending patterns, potentially influencing demand across various sectors. Foreign exchange volatility remains a critical factor, with potential implications for capital inflows, corporate earnings, and overall market stability.

While these uncertainties persist, analysts expect that sector-specific growth drivers, and a gradual improvement in macroeconomic conditions, will support market growth in the second quarter (Q2) of 2025.

Analysts at Highcap Securities believe that discordant tunes from the banking sector regarding the postponement of their full-year results made the market bearish in March 2025. Although their results were impressive when released at the end of the month, it was too late to reverse the damage that had already been done.

The market is beginning Q2 with hope and optimism as major enterprises have started recovering from the damage inflicted on their balance sheets due to the floating of the Naira. Banks are also expected to post unprecedented profits in the second quarter, which would possibly elevate equities in Q2 2025.