The Nigerian capital market demonstrated resilience and growth in 2024, successfully raising N2 trillion in the primary market, a significant achievement lauded by the Association of Securities Dealing Houses of Nigeria (ASHON). This substantial fundraising underscores the market’s ability to attract investment despite existing economic challenges and reinforces investor confidence in its potential. ASHON, representing securities dealing firms on the Nigerian Exchange Limited (NGX), played a crucial role in facilitating this growth by collaborating with regulatory bodies and the government to ensure a stable and efficient market environment. This collaborative approach contributed to a positive trajectory for the market, reflected in the upward movement of the All-Share Index and market capitalization, further strengthening its position as an attractive investment destination for both domestic and international investors.
The market’s success in 2024 extended beyond fundraising, with notable performance indicators exceeding expectations. The year-to-date returns surpassed 36%, significantly outpacing the inflation rate, signifying a robust and healthy market environment. This positive performance is attributed, in part, to the collaborative efforts of market participants like ASHON and regulatory bodies, along with increased investor confidence in the Nigerian economy. The Chartered Institute of Stockbrokers (CIS) echoed ASHON’s positive assessment, with its President and Chairman, Oluropo Dada, highlighting the market’s resilience and its ability to deliver strong returns for investors. This success sets a positive precedent for future growth and reinforces the market’s potential to contribute significantly to the Nigerian economy.
Looking ahead to 2025, market analysts project a bullish trend driven by several factors, including increased participation from local investors and a more stable economic environment. This optimism reflects the positive momentum generated in 2024 and the anticipated continuation of supportive policies and regulations. However, ASHON also recognizes the need for continuous improvement and advocates for specific measures to further enhance market efficiency and attract more investment. These include an upward review of stockbroking fees, which have remained static for an extended period, and the lifting of the suspension on margin trading. These adjustments are seen as crucial to incentivize market participants and unlock further growth potential.
The proposed upward review of stockbroking fees is considered a necessary step to compensate brokerage firms adequately for their services and encourage continued investment in the market’s infrastructure and human capital. Static fees, in the face of rising operational costs and increasing market complexity, can hinder the ability of brokerage firms to provide optimal services and compete effectively. By aligning fees with market realities, ASHON believes that the market can attract and retain qualified professionals, fostering a more robust and competitive landscape.
Similarly, the lifting of the suspension on margin trading is seen as a vital step to enhance market liquidity and provide investors with more flexible trading options. Margin trading, which allows investors to borrow funds to purchase securities, can amplify market activity and potentially generate higher returns. However, it also carries inherent risks, and appropriate regulatory frameworks must be in place to mitigate these risks and protect investors. ASHON advocates for a balanced approach that allows for margin trading while ensuring adequate safeguards are implemented to maintain market stability and investor confidence.
In conclusion, the Nigerian capital market experienced significant growth and positive performance in 2024, raising N2 trillion in the primary market and achieving impressive year-to-date returns. This success was driven by increased investor confidence, a stable economic environment, and the collaborative efforts of market participants, including ASHON and CIS, working in conjunction with regulatory bodies. The outlook for 2025 remains positive, with projections of a bullish market fueled by strong local investor participation and continued economic stability. However, to sustain this positive trajectory and maximize the market’s potential, ASHON advocates for key adjustments, including an upward review of stockbroking fees and the lifting of the suspension on margin trading. These measures are considered essential to further enhance market efficiency, attract greater investment, and position the Nigerian capital market for continued growth and success in the years to come.
