NGX Delivers Africa’s Second-Best Return in May as Investors Pile In

The Nigerian Exchange Group (NGX) recorded a remarkable performance in May 2025, delivering the second-best return among major African stock exchanges. With a robust month-to-date gain of 5.62%, the Nigerian All-Share Index (ASI) showcased strong investor confidence and market resilience, outpacing notable exchanges such as Casablanca, Johannesburg, Cairo, and Accra.

This performance marks a positive milestone for Nigeria’s equities market, which continues to attract significant interest from local and foreign investors despite various economic challenges. Below, we explore the details of NGX’s performance, compare it with other leading African bourses and global markets, and analyze the factors driving investor enthusiasm in Nigeria.

Nigerian Market Shines Bright with 5.62% Gain

The Nigerian All-Share Index began May at 105,920.18 points and steadily climbed throughout the month to close at 111,742.01, finishing strongly in the green. This growth reflects a rally fueled by increased trading volumes and favorable market sentiment, as investors responded positively to government economic policies, corporate earnings reports, and ongoing reforms aimed at boosting business confidence.

With this surge, Nigeria’s stock market capitalization soared to approximately N70.4 trillion (about $170 billion), consolidating its position as the second-largest market in Africa by market capitalization. This growth signals a renewed interest in Nigerian equities and underlines the country’s critical role as a financial hub on the continent.

Nairobi Securities Exchange Tops African Markets

While Nigeria’s NGX recorded a substantial 5.62% gain, the Nairobi Securities Exchange (NSE) led African stock markets in May with an even stronger return of 6.4%. Starting the month at 125.60 points, the NSE peaked at 134.51 on May 19 before closing slightly lower at 134.21.

The NSE’s market capitalization stands at approximately 2.1 trillion Kenyan shillings, which translates to about N25.7 trillion. This impressive performance has brought its year-to-date gains to 8.7%, reflecting a resilient economy supported by increased investor appetite and robust capital market reforms.

Nairobi’s ascendancy is linked to Kenya’s broad economic diversification, improving macroeconomic stability, and a thriving technology sector. The government’s push for innovation and increased foreign direct investment has helped the NSE maintain momentum and attract investors from across the region and beyond.

Comparative Analysis of Other Major African Exchanges

Beyond Nigeria and Kenya, other prominent African stock exchanges showed mixed performances in May:

• Casablanca Stock Exchange (Morocco): The All-Shares Index posted a respectable 3.4% increase, closing at 17,976.11 points. Morocco’s market benefited from its diversified economy, strong export sectors, and growing investor confidence amid broader North African economic reforms.
  
• Johannesburg Stock Exchange (JSE): South Africa’s JSE followed with a 3.0% gain for May, pushing its total market capitalization above ZAR 22.18 trillion (approximately N1.96 quadrillion). Despite ongoing political and economic headwinds, South Africa’s financial market remains the largest on the continent and a key regional benchmark.
  
• Egyptian Exchange (EGX): Egypt’s EGX30 index recorded a 1.8% rise, ending the month at 32,126.22 points. The Egyptian market’s growth was supported by structural reforms, expanding infrastructure projects, and government initiatives aimed at improving economic stability.
  
• Ghana Securities Exchange: Ghana’s market saw a modest 0.8% increase with a market capitalization of GHS 134.82 billion (around N21 trillion). Ghana’s equity market remains relatively small but is steadily growing, supported by improvements in fiscal management and increased private sector activity.
  

Global Market Comparisons: Nigerian ASI Holds Its Own

In the broader global context, Nigeria’s stock market gains in May compare favorably with several major international indices:

• The Nigerian All-Share Index outpaced the UK’s FTSE 100, which gained 3.27%, and Japan’s Nikkei 225 which rose 5.33%.
  
• However, the NASDAQ Composite led global markets with a significant 9.04% gain, finishing the month at 21,340.99 points on a trading volume of 7.5 billion shares.
  
• The S&P 500 also recorded a solid 6.15% increase, closing at 5,911.68 points.
  

These figures reflect ongoing bullish trends in equity markets worldwide, fueled by gradual recovery from pandemic-induced disruptions, supportive monetary policies, and investor optimism around technology, energy transition, and emerging market opportunities.

Nigeria’s ASI performance amid this global backdrop highlights the country’s emerging market potential and resilience despite local economic uncertainties.

Key Drivers Behind NGX’s May Performance

Several factors contributed to Nigeria’s impressive stock market returns in May 2025:

1. Investor Confidence Amid Economic Reforms

The Nigerian government’s continued implementation of economic reforms — including monetary policy tightening to curb inflation and targeted support for key sectors — has boosted investor confidence. Policies aimed at improving business ease, enhancing infrastructure, and encouraging private sector investment have been well-received.

2. Corporate Earnings and Market Sentiment

Positive earnings reports from blue-chip companies, particularly in the banking, telecommunications, and consumer goods sectors, drove investor enthusiasm. Airtel Nigeria emerged as a market leader, topping daily advancer charts and contributing to the ASI surpassing the N70 trillion market capitalization barrier.

3. Robust Trading Activity

Increased trading volumes and liquidity in the Nigerian market further underpinned the rally. This dynamic reflects greater market participation by retail and institutional investors, both domestic and international, attracted by Nigeria’s growth prospects.

4. Diaspora Investment and Foreign Interest

Nigeria’s large diaspora community continues to play a critical role in supporting the economy through remittances and direct investments. Foreign portfolio investors have also shown renewed interest, drawn by valuations that offer upside potential and a relatively stable macroeconomic environment.

Challenges and Outlook for Nigerian Market

Despite these positive developments, the Nigerian equities market still faces challenges that could temper future gains:

• Macroeconomic Volatility: Inflationary pressures, currency fluctuations, and external shocks remain risks that could impact corporate earnings and investor sentiment.
  
• Regulatory and Political Uncertainties: Changes in fiscal policy, tax regulations, or political instability could introduce volatility, as experienced during earlier periods.
  
• Global Economic Conditions: Nigeria’s market is also sensitive to global commodity prices, especially oil, and international financial conditions that influence capital flows.
  

Nonetheless, analysts remain cautiously optimistic about the medium to long-term prospects, citing Nigeria’s vast market potential, growing middle class, and ongoing economic diversification efforts.

The Broader African Market Landscape

The performance of the Nigerian Exchange Group should also be viewed in the wider context of Africa’s financial markets, which are evolving rapidly amid digital innovation and regulatory improvements.

Many African countries are working to enhance capital market infrastructure, encourage cross-border investment, and deepen financial inclusion. Initiatives like the African Continental Free Trade Area (AfCFTA) promise to expand market access and increase regional investment flows, benefiting exchanges such as NGX and NSE.

Furthermore, increasing participation of technology-driven companies, the rise of green finance, and growing interest from global investors are shaping the future of African capital markets.

Conclusion: NGX’s May Rally Signals Growing Investor Confidence

The Nigerian Exchange’s status as Africa’s second-best performing stock market in May 2025 reflects a confluence of supportive economic policies, resilient corporate performance, and increased investor participation. While the Nairobi Securities Exchange slightly edged ahead, Nigeria’s market remains a key driver of Africa’s financial landscape.

As Nigeria navigates economic reforms and external challenges, its equities market continues to demonstrate its capacity to deliver strong returns, attract capital, and support the country’s broader economic development.

Investors and stakeholders alike will be watching closely in the coming months to see if this momentum can be sustained, potentially cementing Nigeria’s position as a leading investment destination on the continent.

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photo source: Google

By: Montel Kamau

Serrari Financial Analyst

4th June, 2025