Nigeria’s stock market is defying the country’s economic struggles. In the face of inflation, sluggish growth, and widespread economic hardship, the Nigerian Exchange (NGX) posted a 16.57% gain in the first half of 2025, rising from 102,928.6 points in January to 119,978.6 in June.
It is the sixth straight year of positive first-half performance and one of the best showings among African stock markets this year. The NGX outperformed major bourses in Egypt and Ghana, and while it trailed Kenya’s 8.7% year-to-date, its overall momentum remains strong.
Globally, Nigeria’s equities beat several developed markets. The NGX topped the S&P 500 (+7.5%), NASDAQ (+7.1%), and FTSE 100, though it still lags far behind global outliers like Poland (+53.4%), Czech Republic (+45.2%), and South Korea (+38.7%).
Sectors such as consumer goods, banking, healthcare, and agriculture have driven the rally. The Consumer Goods Index jumped 52.21%, and banking stocks gained 18.06%. The only major sector to post losses was oil and gas, down 10.12%.
Top gainers include Beta Glass (+414%), Honeywell Flour (+241%), Neimeth (+185%), and Vitafoam (+221%).
Bull market, stalled economy
Yet the disconnect is clear: while the market thrives, most Nigerians are struggling. Inflation cooled to near 23% in May, the naira has only managed to strengthen a bit after significant decline, and unemployment and food insecurity persist. Power shortages, insecurity, and weak public services weigh heavily on households.
So why is the market booming? Analysts tracked by Pluboard point to a mix of reforms, speculative flows, stronger earnings, improved foreign interest, and – crucially – liquidity.
A catch-up rally
For years, Nigerian equities were undervalued, even as companies posted strong earnings. Now, with momentum and liquidity building, valuations are playing catch-up. The NGX’s average price-to-earnings (P/E) ratio stands at 7.4x, still below the historical 9x average—suggesting room for more upside.
Liquidity is fuelling surge
Another big driver is liquidity. Years of accommodative monetary policy, including over ₦23 trillion in deficit financing under the last Central Bank leadership, pumped cash into the system. With few safe investment alternatives, institutional investors—including pension funds—have turned to equities.
“The excess liquidity pumped into the system has allowed domestic investors to route that money to financial assets,” said one Lagos-based analyst. “Stocks are benefiting.”
Rise of the retail investor
Retail participation is also reshaping the market. With trading apps and greater access to market education, more young Nigerians are investing. Retail activity has grown from 24% to nearly 39% of trades over a few years. In a shallow market like Nigeria’s, this has had a major impact on prices.
Foreign Portfolio Investors are back
Perhaps one of the most significant shifts is the return of foreign portfolio investors (FPIs). In the first four months of 2025, FPI transactions jumped 162% year-on-year to ₦877 billion, up from ₦334 billion in 2024. Their share of total market turnover rose from 13.7% to 32.3%, helping lift total transactions to a record ₦2.7 trillion.
Domestic investors still dominate but now account for just 67%, down from 86% a year earlier. In May alone, the NGX market capitalization surpassed ₦70 trillion for the first time.
Investors are betting on reform and the future
Markets are forward-looking, and investors appear to be betting that the Tinubu administration’s reforms—such as FX unification, fuel subsidy removal, and tighter monetary policy—will eventually deliver macroeconomic stability. The market is pricing in future optimism, not current conditions.
In addition, potential new listings like Dangote Fertilizer, Dangote Petrochemicals, and a possible NNPC IPO are also drawing renewed attention. Aliko Dangote, president of the Dangote Group, said last month that Dangote Fertilizer Limited will list on NGX by the end of 2025, while Dangote Refinery is planned for listing in 2026.
He projects the fertilizer business to generate $20 million daily revenue and a cumulative earning potential of $70 billion. Dangote expressed confidence that the listing would offer investors dollar-denominated returns and that dividend payments to shareholders could exceed $3 billion as operations scale up.
The “dollarised business model” is intended to address investor concerns about the naira’s depreciation, offering a more stable return.
What’s in it for young Nigerians
Despite the stock market boom, the gains remain distant for most Nigerians. Fewer than 5% of adults own stocks, according to the Securities and Exchange Commission (SEC). The wealth created by the rally primarily benefits institutions, high-net-worth investors, and listed corporates – not everyday citizens.
Without corresponding improvements in jobs, inflation, and services, the equities boom will remain a story of capital markets, not of the people.
For young Nigerians, the rally offers opportunity—but also a lesson. Equities tied to Nigeria’s long-term growth story—banking, telecoms, infrastructure, healthcare—offer upside. But success depends on discipline, diversification, and patience.
The tools to invest are more accessible than ever. But in a market where fortunes rise while hunger persists, understanding risk is just as important as chasing reward.
Discover more from Pluboard
Subscribe to get the latest posts sent to your email.