By David Akinmola
The Nigerian stock market has reversed weeks of losses to post a remarkable 41 per cent year-to-date (YTD) gain, placing the NGX among Africa’s top-performing exchanges in 2025.
However, analysts are urging investors to remain cautious as volatility pressures and macroeconomic headwinds persist.
Data from the Nigerian Exchange Limited (NGX) show that renewed interest in banking, telecoms, and consumer goods stocks helped the market recover from consecutive weekly declines.
The rebound was driven largely by bargain hunting and improved sentiment around Tier-1 lenders whose valuations had dipped sharply in November’s historic sell-off.
Market capitalisation climbed back above key thresholds, while the All-Share Index (ASI) also recorded broad-based improvements across multiple sectors.
But despite the impressive YTD performance, financial analysts warn that the rally may not be sustainable without improvements in economic fundamentals.
They point to persistent forex instability, elevated interest rates, and rising inflation as key risks that could trigger fresh market corrections. Investor sentiment also remains fragile as companies begin issuing profit warnings ahead of the 2025 full-year earnings season.
“Markets are recovering, but the caution lights are still blinking,” one Lagos-based investment strategist noted. “We are seeing speculative buying rather than strong macroeconomic support. Without stability in the FX market and clearer policy direction, volatility will remain a threat.”
Analysts further highlighted that high yields in the fixed-income market could pull liquidity away from equities in the coming weeks, particularly as Treasury bill and bond rates continue to climb.
Still, the NGX says the market’s resilience shows investor confidence is gradually strengthening, especially in sectors positioned to benefit from ongoing fiscal and monetary reforms.
With uncertainties still looming, experts advise retail and institutional investors to adopt a selective, fundamentals-driven approach as the final trading weeks of 2025 unfold.
