Nigeria Stock Market to GDP Ratio Soars to 24%
The Nigerian stock market as a proportion of its gross domestic output has inched higher to 24%, thanks to persistent monster rallies in the local bourse. At the close of the trading session on Friday, the Nigerian Exchange (NGX) market capitalisation printed at N89.37 trillion, with about a 40% year-to-date gain.
The ratio reflects investors confidence in the local economy amidst expectations that the growth outlook will be bolstered by reforms and some economic adjustments that have been initiated thus far. The ratio, which is far less than one, suggests the local bourse is significantly undervalued, with high growth potential.
“It is a vote of confidence in President Bola Tinubu’s administration’s touch on the economy. Foreign investors and local investors are playing hard in the market due to improved sentiment—not on the companies of interest alone but on the overall tone from the top,” a Broadstreet analyst told MarketForces Africa.
Following a recent rebased exercise, Nigeria’s gross domestic product got a facelift, reaching N372.82 trillion. The country’s rebased exercise updated the GDP base year from 2010 to 2019.
It raised nominal GDP by about 41.7 percent for 2019 and subsequent years, culminating in N372.82 trillion for 2024, according to the statistics office. Based on Warren Buffett indicators, at 24%, the stock market-to-GDP ratio has confirmed that the local bourse is relatively undervalued compared with emerging market peers, a stance top investment firms in Nigeria have maintained.
Stock market analysts said the equity market has the potential to reach N100 trillion in market capitalisation by the end of the third quarter of 2025 in the absence of significant pullout by either local or foreign investors.
The Nigerian Exchange has seen an influx of stock buyers amidst a shift in economic conditions fuelled by reforms. Though this tightens wealth distribution, some Nigerians have up their appetite for taking risks in the stock market in order to stay afloat amidst biting inflation.
Still, financial literacy education remains unimpressive, but the local bourse has proven to be a money-making platform for those with an appetite for a little risk. #Nigeria Stock Market to GDP Ratio Soars to 24% #Nigeria Stock Market to GDP Ratio Soars to 24% UACN Gains 61% on Simultaneous Acquisition, Earnings Update
