- Consumer Goods Stocks to benefit from lower interest rate
- MTN, Dangote Cement, ARADEL, Nigerian Breweries, PZ, Lafarge, others attractive at current prices
- Market Capitalization to close the year above N100trn
Wole Olajide, ACS
The much-anticipated final quarter of the year 2025 (Q4 2025) is here. By all standards, the Nigerian stock market has been bullish, returning 42.81% year to date, with the All-Share Index and Market Capitalisation at 146,988.04 points and N93.296 trillion respectively.
In the course of the year 2025, the stock market has experienced several bullish sessions with prices of stocks hitting new 52 weeks high. Though, there were few temporary pull backs, triggered by profit taking. This also created new entry opportunities for discerning investors. By and large, the market has been bullish.
FTSE Russell has placed Nigeria on its Watch List for a potential upgrade to Frontier Market status, moving it out of the “Unclassified” category assigned in September 2023 due to severe delays in foreign investors’ capital repatriation and FX transactions. This has repositioned Nigeria back on the investment radar for global funds. This implies that there will be significant inflows of Foreign Portfolio Investment (FPI) to the Nigerian Capital Market.
Capital market experts have projected a bullish close for the stock market, as a matter of fact, there is every possibility that the Market Capitalisation may close the year above N100 trillion.
The Managing Director/CEO of Arthur Stevens Asset Management Limited, Mr. Olatunde Amolegbe, a past President of Chartered Institute of Stockbrokers (CIS) and a newly appointed member of Investments and Securities Tribunal (IST) by President Tinubu noted that the stabilizing macro-economic indicators and impressive earnings by listed companies are obvious signs that the market would close positive in Q4 2025.
In his words,
“The hope is that the market will close the year 2025 positive because the signs are positive. The earnings that are being brought up by the Companies are very good. The macro-economic indicators are also stabilizing. I do not see any reason why it should not close positive.
As at last week Thursday, Nigeria has been brought back to the frontier market rating by FTSE Russell. The implication of that is that foreign investors that have stayed out for the country, the ones that have not started coming will likely start coming again. Foreign investors normally rely on this rating agencies. They removed Nigeria from the rating previously because of illiquidity in the Foreign Exchange market. Now that FX market is stabilized, they are bringing us back. So we expect more activities of Foreign Portfolio Investors. And that can only help to boost our market even further.
Consumer Goods stocks are going to benefit from lower interest rate and other benefits as interest rate and FX continues to stabilize.
As inflation also continues to drop, we are going to see Consumer Goods companies perform better”
Mallam Garba Kurfi, the Managing Director/CEO of APT Securities and Funds Limited who also double as a commissioner of the Securities and Exchange Commission (SEC) projected that the equities market would close the year 2025 above 40%.
In his words:
“We are expecting the market to close above 40%; that is above the previous year’s performance. The outlook is positive. Recall that most of the Q2 2025 results were positive. We are expecting Q3 results to hit the market. We are also expecting some of the big market players like MTN, Dangote Cement, BUA Foods, ARADEL and SEPLAT to close positively. They command more than 60% of the market capitalization. So, the market is likely going to close above N100 trillion. Especially if Dangote Fertilizer is listed on NGX as promised before the end of the year. All these are likely to push Q4 2025 to close positive; better than where we are now.
Stocks recommendation for Q4 2025 includes: PZ, Lafarge, ARADEL, Caverton, CWG, MTN and Seplat. Based on their impressive Half Year results, they will perform better than their current prices”.
The Managing Director of GlobalView Capital Limited, Aruna Kebira pointed out that the current rate drop in the fixed income space will trigger capital flight in to the equity market. Discerning investors might want to start taking positions. He also noted that CBN might likely reduce interest rate should inflation rate continues to go down. That will definitely be a boost to the equities market.
Mr. Kebira stated thus:
“The inflation rate is looking downward, and for the first time in so many meetings, CBN cut the interest rate by 50 basis points. It is believed that if inflation continues to go down further, especially if it goes below 20%, CBN will likely reduce the interest rate.
The primary auction market last week dropped massively as far as money market is concerned. This will favour the equity market.
The Insurance sector is currently on recapitalisation exercise. They are submitting to NAICOM how they are going to raise the capital. So, the moment they start. It will be an attraction to the capital market.
As interest rates continue to drop in the fixed income space, it will pose re-investment risk. You can’t sell a bond for 20% and come to buy another one at 15%. That is not a good investment. By the time yield begins to get low in the fixed income space, it discourages investment; and where else will they look up to? The equity market of course.
If you are buying Treasury bill at 15% when inflation rate is more than 15%. It means you are making a loss. The only inflation indexed investment can be found in the equity market. Though it’s risky.
We are expecting Q3 results in the market, which is going to be the last we are going to see this year until March 2026. The expectation is that the result will be good because Q1 and Q2 results were good. It is Q3 results that analysts use to prorate what would have happen in Q4 and begin to determine whether the Companies are going to pay dividend; especially Companies that were held down seriously by the differentials in foreign exchange, the likes of Nestle, MTN, Nigerian Breweries and Guinness. If these Companies are able to pay dividend, it will bring that participation again. There will be influx in the equities market once again.
Last week, Nigerian Index is being recognized again by FTSE Russell. We were removed before, but now we are back; and this is good for the capital market. This will boost the confidence of foreign investors in our market.
With all these put together we will have a bullish Q4 2025.
Stocks to watch are sectors that are raising capital, that is banking and insurance stocks”.
Jide Dahunsi, Group Head, Investment Research at SCM Capital Limited, pointed out that Foreign Exchange (FX) stability significantly boosted earnings performance of Fast-Moving Consumer Goods (FMCG) and Industrial Goods in Half Year 2025; ultimately boosting their share prices. Their Q3 2025 earnings performance are bound to be more impressive which will ultimately impact positive vibration in the market.
He also affirmed that declining rate in the money market and fixed income space will boost the equities market in Q4 2025.
Mr. Dahunsi stated thus:
“The earnings release boosted the market particularly for the Fast-Moving Consumer Goods (FMCG) and the Industrial Goods. When you compared what they did in Q3 2024 (9 months), they were in deep negative because of the FX situation. The FX Stability now has changed their position from the negative earnings in 2024 to positive earnings in Half Year 2025. That’s a boost for the market and that will increase their valuation. It is an expectation that some of them will return to dividend paying policies that they have.
For example, MTN as at 9 months 2024 had N910 billion loss. As at Half Year 2025, they already have N400 billion profit. So, coming to the 9 months, if you that run off, they can have almost up to N1 trillion. Don’t forget that MTN already has tariff increase as well this year. That is going to help them. They have also renegotiated their spectrum and towers. You can now see that year on year, they are going to make over 200% bottom line increase. And that is going to impact their valuation.
International Breweries; coming from over N150 billion loss, to current position of positive now. Cadbury and Nigerian Breweries.
We are approaching Dirty December as well. This will also trigger activities in the market.
Across the market, the yield is going down continually. Treasury Bill Yield dropped by 100 basis point. That is going to push back interest in to the equities market.
The Oil and Gas (upstream) sector will return fantastic result in Q3 because their production have increased.
With the expectation of a better investment environment, we will see more growth in Q4.
Only the banking stocks will have some certain issues and others that will be raising capital like insurance firms. People will be buying more from the offer end than the secondary market”.