MoneyAfrica| Investment Research
Weekly Market Commentary
August 25, 2025.
Good morning, readers, and welcome to this week’s edition of our stock market newsletter!
As always, our newsletter is divided into two sections: Green White Green, covering the Nigerian stock market, and the Star-Spangled Banner, focusing on the US market.
Green White Green Recap
Macro Update
Federal Government Approves Higher Borrowing Limits
The Federal Executive Council has approved the 2024–2027 Medium-Term Debt Management Strategy (MTDS), a plan showing how the government plans to borrow for its needs in a cost effective and sustainable manner .
Over time, the FG has struggled to achieve its borrowing targets, with the FG borrowing much more than expected, especially in foreign currencies like the US dollar (USD). The 70% devaluation in the exchange rate between 2023 and 2024 meant that the FG did not achieve some of its most important targets.
It is therefore no surprise that the FG is setting new targets to capture these changes. The notable change in the MTDS is that the FG can now borrow up to 60% of GDP from the 40% threshold set for 2020–2023. By 2024, debt was already at 52.5% of GDP. The FG also revised the share of external debt up to 45% from 30%, although external debt is currently 52% of total debt.
To achieve these targets, the FG must focus on borrowing domestically and ensuring that the exchange rate remains stable.
Overall, the FG constantly changing debt limits rather than working to attain them is an admission of indiscipline and failure, which continues to damage the economy. To manage the FG’s large debt load, savers and holders of naira are being punished with low returns, which makes them poorer.
Key Takeaways:
- The FG is setting new debt targets, which means much more borrowing, especially in naira
- The FG’s failure to achieve its borrowing targets in the past has condemned investors saving in naira to poor returns.
- Investors need to be cautious of holding the naira long-term by diversifying into stronger FX investments.
FX Update
Naira Edges Higher as Reserves Hit 3-Year Peak
The naira strengthened slightly last week, closing at ₦1,535.03 per US dollar on August 22, compared to ₦1,539.76 the previous Friday—a 0.31% weekly gain. In the parallel market, the naira also firmed to around ₦1,545, from ₦1,560 a week earlier.
Nigeria’s external reserves rose to $41.0bn, the highest level since 2021, up from about $40.2bn the prior week. This reserve build-up provides the central bank with greater firepower to manage FX liquidity and defend the naira.
Key Takeaway:
- The naira’s modest gains are underpinned by stronger reserves, but sustained stability depends on Nigeria’s ability to boost USD inflows through exports and foreign direct investments, rather than relying on volatile portfolio flows.
Remember to save dollar-based goals in dollars, which can be done with apps like Ladda. Just visit www.getladda.com to download. You can also earn up to 20% by investing in naira savings.
Equities Update:
Profit-Taking Triggers Weekly Pullback, But NGX Remains Strong YTD
As of August 22, 2025, the Nigerian equities market saw a broad pullback as investors booked profits after weeks of gains. The NGX All-Share Index fell 2.51% week-on-week (WTD) but remains solidly positive with a 37.00% year-to-date (YTD) return.
The banking (-3.48% WTD; +42.67% YTD) and insurance (-4.71% WTD; +80.62% YTD) sectors led the weekly decline due to profit-taking. The industrial goods sector posted the steepest drop (-8.42% WTD; +39.76% YTD) on heavy sell-offs. Meanwhile, consumer goods emerged as the standout performer, gaining 0.83% WTD and topping the YTD chart with an 85.89% return.
Key Takeaway
Despite last week’s pullback, the market remains robust, with consumer goods and insurance driving YTD gains. Investors should brace for short-term volatility but note that 2025’s equity rally remains intact.
Fixed Income Update
Treasury Bills Auction Sees Strong Demand, Longer Tenors Dominate
At the August 20, 2025 Nigerian Treasury Bills (NTB) auction, investor appetite remained robust, with total subscriptions hitting ₦396.42bn against an offer of ₦230bn, resulting in an overall 172% subscription coverage.
Demand was especially concentrated in the 364-day bill, where subscriptions surged to ₦356.18bn compared to the ₦150bn offered, representing a 237% coverage. The government eventually allotted ₦268.38bn to this tenor, accounting for 88% of total allotments.
In contrast, the 91-day bill struggled to attract bids, recording subscriptions of just ₦10.89bn against an offer of ₦50bn—a coverage of only 22%. The 182-day bill saw healthier interest, with ₦29.35bn subscribed against ₦30bn offered, achieving a 98% coverage.
Secondary Market Yields Ease
In the secondary market, where investors trade existing treasury bills, yields declined across all tenors compared to August 15 as liquidity improved. The 90-day bill eased to 16.65% (from 17.10%), the 180-day bill fell to 18.55% (from 19.00%), and the 364-day bill slipped to 19.17% (from 19.46%).
Key Takeaway:
- Investors are piling into longer-dated bills to lock in higher, risk-free returns, with the 364-day instrument emerging as the clear favourite. Improved liquidity also pushed secondary market yields lower, signalling strong demand despite macroeconomic uncertainties.
You can invest in treasury bills to save for your short-term goal on rent, schools, fees, etc. through Ladda—a fintech app that helps you save at high returns.
For long-term goals, naira-denominated fixed income instruments are not suitable due to inflation and currency risks .
Star-Spangled Banner Recap
US Expected to Cut Rates Soon Amid Job Concerns
At the Jackson Hole Symposium, Federal Reserve Chair Jerome Powell signalled a major policy shift. The Fed is retiring its Flexible Average Inflation Targeting (FAIT) framework and placing greater weight on labour market risks over inflation. With unemployment edging higher, Powell suggested the Fed is ready to cut rates as early as September to support growth and stabilize employment.
Markets responded swiftly. Treasury yields fell, with the 2-year Treasury yield dropping to 3.689%, its lowest since mid-August. US equities recorded strong gains, led by the Dow Jones, which hit a record high.
In the US, the S&P 500 edged up 0.27% (+9.95% YTD), while the Dow Jones outperformed with a 1.49% weekly gain (+7.64% YTD). The Nasdaq slipped 0.56%, though it remains up 11.49% year-to-date.
Europe was stronger, with the FTSE 100 rallying 2.00% (+12.85% YTD) and France’s CAC 40 adding 0.51% (+7.79% YTD). In Asia, Japan’s Nikkei 225 retreated 1.72% on profit-taking, trimming its gains to +6.86% YTD.
The MSCI World Index rose 0.44% on the week, extending its year-to-date gain to 13.08%.
Key Takeaways:
- Fed Pivot: Powell prioritises jobs over inflation, signalling potential rate cuts from September.
- Investor Sentiment: Markets are pricing in a dovish Fed, driving bond rallies and equity gains.
- Opportunities Ahead: Lower yields could favour growth stocks, EM inflows, and fixed-income assets.
Remember to always save for your dollar goals in dollars. You can do this with us on Ladda—a fintech app that helps you save at high returns.
We hope you find this edition insightful, and as always, stay focused on your financial goals!