The valuation of Nigeria’s stock market has risen sharply, with the stock market-to-GDP ratio now standing at 24%, indicating a surge in investor interest and confidence amid ongoing economic reforms. As of the close of trading last Friday, the Nigerian Exchange (NGX) posted a market capitalisation of ₦89.37 trillion, up roughly 40% year-to-date.
This growing ratio reflects a promising outlook for the Nigerian economy, suggesting investors are increasingly optimistic about the reform initiatives and macroeconomic adjustments implemented by President Bola Tinubu’s administration. According to a Broadstreet analyst, “The renewed optimism isn’t just focused on individual companies—there’s confidence in the entire economic direction coming from the top.”
Despite its rise, the ratio remains well below parity, hinting that Nigerian equities are still significantly undervalued, especially when compared to other emerging markets. This aligns with the sentiments of major investment institutions, which have long argued that the local equities market holds vast growth potential.
The development follows a GDP rebasing exercise by the National Bureau of Statistics, updating the base year from 2010 to 2019. This revision adjusted Nigeria’s nominal GDP upward by 41.7% and recalculated it at ₦372.82 trillion for 2024.
With the new data, analysts using the Warren Buffett market valuation metric contend that the NGX remains undervalued, and expectations are mounting that the market could surpass ₦100 trillion in capitalisation by the third quarter of 2025—assuming investor confidence remains strong and no major capital outflows occur.
Driven by persistent rallies and improved risk appetite among both foreign and local investors, Nigeria’s stock market has attracted a wave of interest. Even with inflation biting into consumers’ purchasing power, many retail investors are diving into equities, viewing it as a viable wealth-building alternative.
However, a gap remains in financial literacy, which could limit broader participation. Still, for risk-tolerant individuals, the stock market continues to present substantial returns—underscoring the growing appetite for investment as Nigerians seek to navigate economic uncertainties.
