Amanze Chinonye
Nigeria’s equity market plunged in mid November as a toxic mix of geopolitical jitters following public comments by U.S. President Trump and anxiety over a proposed Capital Gains Tax (CGT) policy prompted heavy profit taking by foreign and local investors.
The rout forced the NGX All Share Index down about 5 percent on Tuesday, Nov. 11, marking the steepest single day fall since March 19, 2010.
The NGX All Share Index closed at 141,327.30 points, down roughly 7,454.60 points (approximately 5.01%) from the opening level of 148,781.90. Local market trackers reported the session extended the market’s losing streak to seven consecutive sessions.
Join our WhatsApp ChannelLocal market data published by market reporters put the one day market cap loss at about ₦4.6 trillion, taking total listed market capitalisation to roughly ₦89.9 trillion by close of trading on Nov. 11.
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Major blue chip names hit daily limits: Dangote Cement Plc, MTN Nigeria Communications Plc, and BUA Cement Plc each fell by the maximum daily allowable decline (10%), closing at ₦594.00, ₦162.00, and ₦429.30 per share respectively.
Estimated market cap hits for major movers: Dangote Cement (approximately ₦1.11 trillion lost), MTN Nigeria (approximately ₦1.0 trillion lost), and BUA Cement (approximately ₦609.6 billion lost). Month to Date and Year to Date returns moved to –8.3% and +37.3% respectively.
Traders said the sell off was driven by two interlinked concerns. First, a proposed tightening of capital gains taxation for equity investors, widely reported in international and local financial press, prompted large investors to lock in profits ahead of potential higher tax liabilities.
Second, a highly publicised post by U.S. President Donald Trump saying he had asked the Pentagon to “prepare for possible action” regarding Nigeria and threatening to suspend U.S. aid spooked foreign investors and raised perceived sovereign risk premiums.
Analysts said the confluence of policy uncertainty and a geopolitical shock created a rapid flight to safety, causing foreign portfolio flows to reverse and exerting downward pressure on highly capitalised equities.
Sectoral impact:
NGX Industrial Goods Index: –8.6%
NGX Banking Index: –7.3%
NGX Oil & Gas Index: –4.6%
NGX Insurance Index: –4.3%
NGX Consumer Goods Index: –2.2%
Market voices
Victor Aluyi, co managing partner at Aztran Global Investments, told international press that “it’s the whole capital gains tax issue, a bit more clarity is needed on it,” describing the market as unsettled amid implementation uncertainty.
Tajudeen Olayinka, an investment banker quoted in local media, said the ₦4.6 trillion wipeout reflected “the combined impact of Trump’s threat and the uncertainty surrounding the Capital Gains Tax,” adding that large cap stocks were the immediate transmission channel for the sell off.
David Adonri, Vice Chairman at HighCap Securities, characterised the movement as a short term market correction, noting the “underlying fundamentals remain strong” and urging investors to separate short term volatility from longer term prospects.
Implications
Short term: Elevated volatility, concentration of losses in large cap names, and an increased cost of capital for issuers intending to raise funds in the near term.
Medium term: Potential re pricing of foreign portfolio flows and a reassessment of Nigeria’s risk premium by international asset managers if policy uncertainty persists.
Policy takeaway: Market participants and analysts urged policymakers to provide swift clarity on the CGT framework to stem further confidence erosion.
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.
