Happy New Year, Investors!

As we welcome 2025, it is expected that the year will offer a mix of challenges and opportunities. Nigeria's economy is poised to grow at its fastest pace since 2014, with GDP growth expected to reach 3.7% on the back of healthy performances in oil & gas and manufacturing. Inflation is projected to moderate, and the Central Bank of Nigeria (CBN) is likely to lower interest rates in the second half of the year, creating an optimistic outlook for both fixed income and equities.

In the domestic fixed-income market, the focus should be on long-term government bonds, which currently offer coupon yields of about 19.0%. With rates expected to decline by around 100 to 250 basis points across the Naira curve and the contractions likely to be more pronounced in the short end, locking in these yields now can provide stable income, potential capital gains, and protection against re-investment risks. Meanwhile, Nigerian equities should stand out as a high-return opportunity, with a forecasted c.40.0% return driven by expectations of improved fundamentals, Naira stability, and recovery in corporate performances.

Globally, geopolitical shifts and fiscal stimulus policies, particularly from the US, make diversification essential. High-yield Eurobonds in emerging and frontier markets present attractive opportunities, while defensive equities in developed markets and select growth sectors in emerging markets can provide stability and other potential portfolio benefits.

For 2025, the strategy is clear: lean into Nigeria's high-growth potential with a strong allocation to equities and long-term bonds while diversifying globally to mitigate risks and tap into high-yield opportunities abroad.

Here is to a prosperous and well-balanced investment year ahead. Happy New Year!

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CardinalStone Research 

Lagos Office: 5 Okotie Eboh Street 

                        South-West Ikoyi, Lagos

                        Nigeria

Abuja Office: 4 Misratah Street

Off Parakou Crescent

                       Wuse II, Abuja, Nigeria

Tel: +234(1) 7100433, 7100434

Email: research@cardinalstone.com 

Website: www.cardinalstone.com   

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CardinalStone is an investment management firm located in Nigeria and registered with the Securities and Exchange Commission (SEC).