Amanze Chinonye
Nigerian equities have recorded one of their sharpest declines this year, with panic-driven sell-offs wiping out roughly ₦1.8 trillion in market value within four trading sessions, as investors react to fiscal uncertainty and rising geopolitical tensions.
Data from the Nigerian Exchange (NGX) show that the All-Share Index (ASI) extended its losing streak to a fourth day, sliding from 154,123.62 points at last Friday’s close to 150,026.55 points by Thursday. The downturn also trimmed year-to-date returns from 49.74% to 45.76%, reversing much of the strong momentum recorded in October.
Capital Gains Tax Fears Drive Sell-Off
Market participants who spoke to Nairametrics said that the sell-off is being driven largely by uncertainty surrounding the Federal Government’s proposed 25% Capital Gains Tax (CGT) on share profits above ₦150 million, expected to take effect in January 2026 pending legislative approval.
Join our WhatsApp ChannelInstitutional investors and high-net-worth traders have been front-loading profit-taking, describing the looming tax as a potential “25% haircut” on future equity gains. Fund managers warn that without clarity on implementation, the measure could trigger capital flight, drain liquidity, and stall the fourth-quarter recovery that pushed October returns above 8%.
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Profit-Taking and Macro Repositioning Intensify Pressure
Analysts say the pullback also reflects heavy profit-taking after October’s rally and a rotation into fixed-income markets, where yields remain attractive and recent government auctions were oversubscribed. Nigeria’s latest Eurobond issuance, reportedly 200% oversubscribed underscores the shift towards safer assets as risk appetite thins.
Geopolitical Concerns Spark Foreign Investor Retreat
Foreign portfolio investors are additionally reacting to rising geopolitical risk following U.S. President Donald Trump’s threat of military action against Nigeria over alleged human-rights violations. The warning has amplified offshore risk aversion and triggered speculative sell-offs in foreign-held positions.
Banking and Consumer Stocks Lead the Decline
The banking sector bore the heaviest losses, with ACCESSCORP, GTCO, ZENITHBANK and ETI experiencing steep declines as major institutions aggressively cut their exposure. Though UBA, FCMB and WAPCO showed pockets of resilience, overall sentiment in the sector remained weak.
Consumer-facing stocks such as DANGSUGAR, INTBREW, GUINNESS and TRANSCORP also fell sharply, reflecting investor concerns over rising Q4 operating costs and cooling consumer demand. Midweek weakness extended to MTNN, which deepened Wednesday’s 1.19% slump.
Strong Turnover Shows Rotation, Not Exit
Despite the bearish tone, trading activity remained strong, with more than 2.4 billion shares worth ₦77 billion exchanged during the week. Analysts note that this reflects capital rotation rather than outright exit, as portfolios move into defensives and cash-heavy instruments.
Fiscal Uncertainty Widens Confidence Gap
Analysts warn that the broader downturn reflects a crisis of confidence linked to fiscal communication gaps. Market capitalization dropped from ₦58.6 trillion to ₦56.8 trillion as investors waited for clearer guidance from the Federal Government and tax authorities on the scope and timing of the CGT rollout.
Government efforts to expand its non-oil revenue base including renewed enforcement of the existing 10% capital gains tax on asset disposals have heightened fears that equities may face stricter compliance measures.
With sentiment still fragile, market players are watching for policy signals from the Ministry of Finance, FIRS, and the Debt Management Office (DMO). Analysts caution that without a clear communication strategy, November risks becoming the worst-performing month of 2025 for the Nigerian market.
Still, some fund managers told Prime Business Africa that the correction is opening up attractive entry points. Once clarity around CGT enforcement emerges, they expect bargain hunters to return to fundamentally strong and undervalued stocks.
Amanze Chinonye is a Staff Correspondent at Prime Business Africa, a rising star in the literary world, weaving captivating stories that transport readers to the vibrant landscapes of Nigeria and the rest of Africa. With a unique voice that blends with the newspaper's tradition and style, Chinonye's writing is a masterful exploration of the human condition, delving into themes of identity, culture, and social justice. Through her words, Chinonye paints vivid portraits of everyday African life, from the bustling markets of Nigeria's Lagos to the quiet villages of South Africa's countryside . With a keen eye for detail and a deep understanding of the complexities of Nigerian society, Chinonye's writing is both a testament to the country's rich cultural heritage and a powerful call to action for a brighter future. As a writer, Chinonye is a true storyteller, using her dexterity to educate, inspire, and uplift readers around the world.
