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Capital market: Experts optimistic for another bull run in 2025

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Stock market gains N99bn amid bullish trend

A few days ago, the Nigerian capital market closed the trading session for the year 2024 on a bullish note. Already, the market has gained 0.24 percent in the first three days of the new year, indicating that many investors smiled to the banks this season. This came after the market returned 37.65 percent in year 2024 from January 2, to December 31, 2024.

After all, stock prices also increased over time this year. Analysts reckon that the year was very bullish.

Wikipedia notes that “Bull market” is the term used to describe a financial market in which prices are rising or expected to increase. It is often used to refer to the stock market but can be applied to anything traded, such as bonds, real estate, currencies, and commodities.

Prices of securities rise and fall continuously during trading. However, a bull market occurs over extended periods when many security prices rise. Bull markets tend to last for numerous months or even years.

The market has enjoyed more of a bull market last year. This is reflected not only in the upward movement of equities prices of different sectors of the market but also in the upsurge of individual stocks.

 

However, the market ironically remained bullish after a year of anguish, poverty, a depressed economy, high inflation, and huge debt, in Nigeria.

Experts agree that when the economy is down income and employment decline; stock prices fall as companies struggle to sustain profitability. They also observed that a sign that the economy has entered the trough phase of the business cycle is when stock prices increase after a significant decline. Yet the equities market sentiments remained bullish.

 

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EQUITIES MARKET IN 2024

 

In 2024, the Nigerian equities market experienced significant growth, with the All-Share Index (ASI) delivering a year-to-date performance of 37.65%, continuing the bullish momentum from 2023.

 

Top 10 Best Performing Stocks in Nigeria for 2024:

 

1. Juli Plc – Achieved a remarkable 1,646% increase, starting the year at ₦0.59 and closing at ₦10.30.

 

2. Sunu Assurances – Gained 877%, with shares rising from ₦1.10 to ₦10.75.

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3. Oando Plc – Experienced a 529% appreciation, moving from ₦10.50 to ₦66.00, driven by corporate actions during the year.

 

4. Eunisell Interlinked – Saw a 502% increase, with shares climbing from ₦3.20 to ₦19.27.

 

5. Transnational Corporation (Transcorp) – Continued its bullish trend with a 402% rise, from ₦8.66 to ₦43.50.

 

6. Conoil Plc – Achieved a 362% gain, with shares increasing from ₦20.00 to ₦92.00.

 

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7. Veritas Kapital Assurance – Recorded a 350% appreciation, moving from ₦0.20 to ₦0.90.

 

8. SCOA Nigeria Plc – Experienced a 300% increase, with shares rising from ₦2.00 to ₦8.00.

 

9. FTN Cocoa Processors – Saw a 275% gain, climbing from ₦0.40 to ₦1.50.

 

10. Champion Breweries – Achieved a 250% appreciation, with shares increasing from ₦2.00 to ₦7.00.

 

 

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Several factors have been fingered to contribute to the strong performance of the domestic equities market in 2024, including the Nigerian Exchange Limited (NGX) facilitating N8.1 trillion in new listings and fundraising activities from 20 companies, notably in the banking and brewery sectors.

 

The Central Bank of Nigeria’s (CBN) revised capital requirements pushed banks to raise capital through public offers, rights issues, and private placements, thereby enhancing their growth potential. Companies like Nigerian Breweries Plc and International Breweries Plc utilized equity markets to reduce debt and improve financial flexibility.

 

Major new listings bolstered market momentum, with Aradel Holdings Plc introducing N3.05 trillion worth of shares, Transcorp Power Plc adding N1.8 trillion, and Haldane McCall Plc contributing 3.12 billion shares valued at N11.99 trillion. These developments increased market capitalization and investor confidence.

 

Additionally, favorable federal government policy reforms created a supportive regulatory environment, attracting both domestic and foreign investments, and reinforcing the equities market’s resilience in a challenging economic landscape.

 

Analysts perspectives

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Stakeholders in Nigeria’s capital market acknowledged significant growth in the local equities market in 2024, with the NGX All Share Index (ASI) performing well despite economic challenges.

Temi Popoola, CEO of Nigerian Exchange Group, emphasized the market’s resilience and innovation, noting that policy reforms in the oil, gas, and currency sectors have boosted operational efficiency and returns for investors.

Chief Executive Officer of Crane Securities limited, Mr. Mike Ezeh told Business Hallmark that aside the banking recapitalization exercise policy of the Central Bank of Nigeria which gingered the interest of investors to take their rights, other factors include the volatility in the money market which made investors run the capital market for safety. These and others fueled the bullish run in 2024.

 

Financial analyst Ifeanyi Chigbo pointed out that while the ASI did not achieve the same growth level as in 2023, the delayed year-end rally showed the market’s adaptability. He highlighted the crucial role of domestic investors in stabilizing market activity.

 

Notable sector performances included the Oil and Gas sector, which surged by 160%, followed by Insurance at 92% and Banking at 19.4%. Aggregate dividends paid by listed firms increased by 118%, indicating strong corporate performance. The Primary Market saw significant activity, with N5.7 trillion raised in new capital, aided by banks’ recapitalization efforts and NGX’s new public offering portal, which streamlined the distribution process.

 

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Prospective Top Performers for 2025:

 

While predicting exact performances is challenging, several stocks are anticipated to perform well based on market trends and company fundamentals:

 

1. Seplat Energy Plc – As a leading independent oil and gas company, Seplat is expected to benefit from favorable energy market conditions.

 

2. MTN Nigeria Communications Plc – With the expansion of digital services, MTN Nigeria is poised for growth.

 

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3. Dangote Cement Plc – As a major player in the construction sector, Dangote Cement is likely to see increased demand.

 

4. Airtel Africa Plc – With a growing subscriber base, Airtel Africa is expected to continue its upward trajectory.

 

5. Zenith Bank Plc – Strong financial performance positions Zenith Bank for potential appreciation.

 

6. Guaranty Trust Holding Company Plc (GTCO) – Diversification strategies may drive GTCO’s growth.

 

7. BUA Cement Plc – Infrastructure development projects could boost BUA Cement’s performance.

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8. Nestlé Nigeria Plc – Consumer goods demand may enhance Nestlé’s market position.

 

9. United Bank for Africa (UBA) – Pan-African operations could contribute to UBA’s growth.

 

10. FBN Holdings Plc – Restructuring efforts may positively impact FBN Holdings’ performance.

 

TOP African Equities Market

 

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When comparing the Nigerian equities market to other major African markets, several key observations emerge:

 

1. South Africa (Johannesburg Stock Exchange – JSE): The JSE is Africa’s largest and most developed market. In 2024, it experienced moderate growth, with the All Share Index (ALSI) increasing by approximately 12%. This performance, while positive, was outpaced by Nigeria’s ASI.

 

2. Egypt (Egyptian Exchange – EGX): The EGX faced volatility in 2024 due to economic reforms and currency fluctuations. The EGX 30 Index ended the year with a modest gain of around 8%, reflecting cautious investor sentiment.

 

3. Kenya (Nairobi Securities Exchange – NSE): The NSE experienced a challenging year, with the NSE 20 Share Index declining by 5% in 2024. Factors such as political uncertainties and reduced foreign investor participation contributed to this downturn.

4. Morocco (Casablanca Stock Exchange – CSE):The CSE’s MASI Index recorded a 10% increase in 2024, driven by growth in the banking and telecommunications sectors. However, this growth was still below Nigeria’s market performance.

5. Ghana (Ghana Stock Exchange – GSE): The GSE Composite Index saw a decline of 3% in 2024, influenced by economic challenges and currency depreciation, leading to reduced investor confidence.

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In 2024, Nigeria’s equities market outperformed several other major African markets, showcasing robust growth and significant capital appreciation among top-performing stocks. Looking ahead to 2025, while certain stocks are poised for potential growth, investors should conduct thorough research and consider market dynamics before making investment decisions.

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