Balancing Growth & Hurdles | H1:2025 Nigeria Strategy Report
As we usher in the new year, the global economic outlook for 2025 presents a mix of steady growth and strategic opportunities. The IMF predicts a modest 2.20% GDP growth for the U.S., with expected rate cuts likely to give equities and bonds a boost, while the EU and Japan show signs of stabilizing. China's projected 4.50% growth, driven by bold fiscal and accommodative monetary policies, signals strong potential in emerging markets. To capitalize on this, investors are encouraged to diversify, focusing on high-growth sectors like AI and technology, as well as stable dividend-paying stocks in financials and consumer discretionary.Nigeria's economy is set for steady growth, expected to reach 4.13%, driven by resilience in the oil and non-oil sectors. On monetary policy, we expect the Central Bank of Nigeria's hawkish stance to linger into the first half of 2025, given the Bank's drive to close negative real rate of return. Meanwhile, the government’s ambitious NGN47.90trn 2025 budget focuses on key sectors such as defence and security, infrastructure and education, with funding through domestic and foreign sources.
In the fixed income market, elevated yields present an opportunity for investors to lock in current rates, especially for long-term bonds offering attractive returns. However, liquidity controls and inflation management by the Central Bank are expected to keep short-term rates high, emphasizing a cautious approach for short-term instruments.
For equities, optimism surrounds the oil and gas sector, bolstered by increased investments in the sector. Banking and industrial goods sector also show promise, supported by high-interest margins and increased government spending, respectively.
2025 holds exciting opportunities, with Nigeria’s growth and global markets presenting promising prospects. It’s a year to strategically position portfolios, capitalize on key sectors, and stay agile. Let’s approach it with confidence and make the most of what’s shaping up to be a rewarding year ahead!
ARM Securities Limited is a full-service brokerage house that offers best-in-class brokerage services to local as well as foreign private and institutional investors. Formerly known as Hamilton Hammer, the Company commenced operation in 1994 and was acquired by ARM Investment Managers in 2008--an acquisition which has successfully re-positioned the company as a recognized brokerage firm in Nigeria. The Company is a dealing member of the Nigerian Stock Exchange (NSE) and is regulated by Securities and Exchange Commission (SEC). ARM Securities research team provides insightful commentaries on the Nigerian economy and its equity and debt markets using an approach which incorporates a thorough understanding of the fundamentals of the industries and companies under coverage. The research therefore adopts an integrated methodology of top-down analysis and bottom-up stock selection, which focuses on publicly quoted companies on the Nigerian Stock Exchange that are judged to offer the highest potential for earnings growth. In addition, its analysts provide periodic commentaries on a range of topical global and local issues which provide investing clients with a holistic view of the opportunities and risks in today’s financial market landscape.
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