In this report, we assess the outlook for Nigeria’s equities market as it enters the final quarter of 2025, highlighting the key drivers that could carry forward the strong year-to-date (YTD) performance. YTD, the NGX All-Share Index has already delivered a robust 38.7% gain, making it one of the best-performing markets across frontier Africa.
Building on this momentum, we project an additional +11.9% return in Q4-25, which would bring full-year performance to approximately +50.6%. This view is anchored on sustained disinflation, currency stability, continued monetary easing, and resilient earnings momentum.
While we note that risks such as FX volatility resurfacing, weaker earnings, inflationary pressures, or strong external shocks could weigh on sentiment, we see these as limited in probability.
That said, uncertainty around the new Capital Gains Tax (CGT) regime could introduce some volatility. In the sections that follow, we review the YTD journey, unpack the fundamental drivers, and outline our expectations for Q4-25 alongside our stock recommendation.
Year in Review
The NGX All-Share Index has advanced 38.7% YTD, consolidating Nigeria’s position as one of Africa’s top-performing equity markets in 2025. The rally has been underpinned by easing inflation, currency stability, policy reforms, and resilient corporate earnings, with each quarter shaped by distinct drivers.
Q1-25 (+2.7%): Market gains were modest, reflecting mixed reactions to the inflation rebasing and delays in anticipated monetary policy easing, alongside profit-taking in tickers such as OANDO, ACCESSCORP, and BUACEMENT. Nonetheless, gains in heavyweights including MTNN, GTCO, and PRESCO provided enough support to keep the quarter in positive territory.
Q2-25 (+13.6%): Sentiment improved on the back of sustained disinflation, declining fixed income yields, and a broadly positive reaction to Q1 earnings, which collectively renewed buying interest in risk assets.
Q3-25 (+18.9%): The strongest quarter to date, with July (+16.6%) delivering the bulk of the gains, when the market staged a broad-based rally supported by stronger-than-expected H1-25 earnings and attractive valuations. In August, gains extended to insurance counters following the approval of the Nigerian Insurance Industry Reform Act (NIIRA). However, toward the end of the quarter, momentum slowed, with profit-taking across select counters and only modest support from the late-quarter MPR cut (-50bps to 27.0%).
From a sectoral perspective, performance was broadly positive, with the Consumer Goods (+94.7%), Insurance (+65.9%), Industrial Goods (+41.9%) and Banking (+39.6%) indices all advancing.
Consumer Goods advanced on bargain-hunting and positive earnings momentum; Insurance rallied on regulatory reforms following the passage of the NIIRA; Industrials were lifted by pricing adjustment, strong infrastructure-driven demand and cost efficiencies; and Banks benefited from elevated yields and improved loan growth. In contrast, the Oil & Gas (-7.0%) index declined, as downstream players faced margin erosion as the Dangote Refinery began full operation, which disrupted pricing dynamics and pressured earnings.
Momentum to Carry into Q4-25
We expect the Nigerian equities market to sustain its positive trajectory in Q4-25, supported by four reinforcing pillars: an improving macro backdrop, resilient corporate earnings, attractive valuations, and sustained support from domestic institutional flows.
Macro anchors remain supportive: We believe the macroeconomic backdrop will be supportive in Q4-25, anchored by disinflation and currency stability. For perspective, inflation has sustained a clear downward trajectory, easing from 34.80% in December 2024 to 20.12% by August 2025 (post-rebasing), with year-end expectations pointing to high/mid-teen levels (Cordros estimate: 17.50%).
This disinflationary trend is improving real returns for investors, supporting household consumption, and providing corporates with greater visibility on margins. At the same time, the naira has shown rare stability, appreciating modestly (+3.9% YTD) on the back of reforms and more orderly FX market conditions.
This stability has sharply reduced the FX translation losses that eroded earnings in prior years and has helped restore confidence to attract capital inflows. Against this backdrop, the CBN reduced the Monetary Policy Rate (MPR) by 50bps to 27.00% at its September meeting, marking the first policy easing since May 2020. We expect this to be the start of a gradual easing cycle that lowers borrowing costs, reduces the relative appeal of fixed income, and strengthens the case for increased equity allocations.
Looking ahead, we expect headline inflation to trend lower towards 17.50% by November, the naira to remain stable, and the MPC to deliver a 100bps reduction in the MPR at its November meeting, taking the policy rate to 26.00%. Together, these shifts should ease funding conditions, reinforce earnings resilience, and sustain investor appetite for equities into year-end.
Earnings momentum to drive sustained gains: H1-25 results confirmed a decisive earnings resurgence across listed corporates. For context, 88.9% of listed companies on the Nigerian Exchange reported positive earnings in H1-25, up from 84.4% in 2024FY and 72.5% in 2023FY.
Momentum has been underpinned by revenue expansion, margin improvement, and the sharp reduction of FX losses. Revenue growth was driven largely by price adjustments, particularly among manufacturers.
Margins also improved as firms leveraged FX stability, better liquidity conditions, and operational efficiencies. Crucially, FX losses that eroded earnings in prior years have subsided as companies deleveraged FX debt and operated under a more orderly FX regime.
The earnings resurgence has translated into broad-based share price gains, with 85.5% of listed stocks posting price appreciation YTD, compared with 80.8% in 2024. This performance underscores how investors are rewarding earnings momentum through higher valuations. We expect this dynamic to persist into Q4-25, with anticipated upbeat 9M-25 results reinforcing sentiment and sustaining market momentum.
Valuations remain compelling: Despite five consecutive years of gains, Nigerian equities remain inexpensive on both an absolute and relative basis. The market trades at a P/E of 7.3x, a steep discount to its 5-year historical average of 10.7x and below comparable frontier markets such as Kenya (7.5x), Vietnam (16.1x), and Morocco (19.7x).
On an absolute basis, valuation gaps are particularly evident in the Banking Sector, where strong capital positions and robust profitability are not fully reflected in valuations, and in the Industrial Goods Sector, where margin resilience has yet to be fully priced in.
The earnings picture reinforces this disconnect. Market-wide EPS has grown by 72.8% YTD, rising to NGN15,988.04 from NGN9,253.83 in 2024, while ROE currently stands at 28.3%, nearly twice the 10-year average of 14.9%.
We expect the market to close 2025 with an EPS of c.NGN20,701.64, representing a 123.7% y/y increase and underscoring the strength of the current earnings cycle. Even on this elevated base, the market is projected to end the year at a justified forward P/E of c.7.5x, still well below the historical average. In our view, the combination of robust earnings growth, elevated returns on equity, and discounted multiples provides meaningful headroom for further re-rating.
Institutional flows to anchor year-end performance: Institutional investor activity has remained a key pillar of market performance in 2025. Net institutional inflows have reached NGN213.37 billion YTD (as of July 2025), well above the NGN139.93 billion recorded in 2024FY, underscoring the resilience of domestic institutions in supporting equities despite intermittent net retail (NGN25.98 billion) and foreign (NGN61.82 billion) outflows.
These flows have reflected deliberate portfolio rebalancing in response to declining fixed income yields, attractive valuations in equities, and strong corporate earnings delivery. As observed in previous years, institutional participation tends to strengthen in the final quarter as portfolio managers position ahead of year-end reporting and dividend cycles.
With the macro backdrop turning more supportive, and equities continuing to offer compelling entry points, we expect institutional flows to remain a critical source of liquidity and to provide a solid anchor for sustaining market momentum through Q4-25. That said, we might also see some support from renewed foreign portfolio inflows as FX market conditions stabilize and global monetary policy turns more accommodative.
Q4 Gains to Cement 2025 Rally
We expect the NGX All-Share Index to close 2025 on a strong note, advancing by 11.9% in Q4-25, and bringing the full-year gain to 50.6% y/y, above the 154,000.00 point mark. This performance should be underpinned by resilient earnings, supportive macro conditions, and sustained institutional participation, keeping equities on a positive trajectory into year-end.
Capital Gains Tax Reform: A Key Risk to Market Expectations
The 2025 Capital Gains Tax (CGT) regime represents the most significant quantifiable risk to our outlook. The rate has been raised to 25.0% from 10.0%, but the real uncertainty lies in implementation.
If tax authorities assess gains based on historical acquisition prices, investors could face retrospective liabilities that materially inflate their tax burden.
Beyond the tax cost itself, ambiguity over how the rules will be applied creates further uncertainty, undermining investor confidence. This makes market reaction difficult to predict.
On one hand, a retrospective approach could trigger near-term selloffs as investors crystalize gains, with re-entry occurring at a slower pace, resulting in weaker liquidity and heightened volatility. On the other, more explicit guidance and smoother implementation could limit disruptions and keep trading conditions orderly.
Cordros
