Nigerian Exchange Limited Shows Resilience Amid Market Volatility
The Nigerian Exchange Limited (NGX) recorded a sharp rebound last week after a dramatic sell-off triggered concerns over the new capital gains tax (CGT), geopolitical uncertainties, and institutional portfolio adjustments.
On Tuesday, the NGX All-Share Index (ASI) plunged 5.01 per cent in a single day, marking one of the steepest daily declines in recent years.
Analysts attributed the sell-off primarily to concentrated institutional selling and large block trades, rather than broad-based market participation.
Offshore investors showed heightened activity in key banking stocks, while blue-chip equities such as Dangote Cement, BUA Cement, Aradel, Transcorp Power, Stanbic IBTC, and MTN Nigeria contributed heavily to the downturn.
By midweek, however, the Nigerian Exchange Limited witnessed a recovery, moderating the weekly market-capitalisation loss to N1.50 trillion (1.58 per cent) and the ASI decline to 1.68 per cent.
The ASI’s year-to-date return as of Friday stood at 42.8 per cent, underscoring the market’s resilience despite recent volatility. The market rebound was supported by renewed investor interest and strategic government assurances.
Federal Government Assures Balanced Approach on Capital Gains Tax
A major boost for the Nigerian Exchange Limited came from statements by the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, at the NGX Closing Gong Ceremony.
The event marked the listing of the Ministry of Finance Incorporated Real Estate Investment Fund Series 2 on the exchange.
Edun acknowledged the concerns raised by market participants regarding CGT, stating:
“We have heard what you have said on capital gains tax.
We are looking at it, and we will consult on what will give Nigeria an optimal result.
We will listen, analyse, discuss, and, at the end, decide, hopefully, what is best for Nigeria and Nigerians.”
Meanwhile, the Chairman of the Presidential Fiscal Policy & Tax Reforms Committee, Taiwo Oyedele, outlined the key elements of the revised CGT framework.
According to Oyedele, the reforms make the tax system fairer, reduce investment risks, and encourage reinvestment.
Progressive tax rates now range from zero to 30 per cent, depending on income levels, with high-income corporate investors expected to pay a reduced 25 per cent under broader corporate tax reforms.
Exemptions under the new framework include disposals within 12 months where proceeds do not exceed N150 million or total gains are below N10 million.
Reinvestment of proceeds into Nigerian shares within 12 months is fully exempt where thresholds are exceeded.
Additionally, foreign share disposals repatriated through Central Bank-authorised channels, as well as certain corporate reorganisations and investments in labelled startups, are exempted from CGT.
Trading Volume and Sector Performance on NGX
Last week, the Nigerian Exchange Limited recorded a total turnover of 7.325 billion units of shares valued at N156.43 billion across 134,383 deals.
This represents a notable increase from the previous week’s 3.575 billion units valued at N107.01 billion, despite slightly fewer trades.
High-volume stocks included Cornerstone Insurance Plc, Access Holdings Plc, and Zenith Bank Plc, which together accounted for 64.87 per cent of the total equity turnover volume and 26.29 per cent of the turnover value.
Sector performance showed a mixed trend but leaned positive.
The Banking, Insurance, and Consumer Goods indices advanced by 1.26 per cent, 2.42 per cent, and 0.46 per cent, respectively.
Industrial Goods and Oil & Gas sectors, however, declined by 6.97 per cent and 0.85 per cent, reflecting sector-specific pressures on the Nigerian Exchange Limited.
Market Analysts Provide Outlook
Analysts at AIICO Capital noted that the recent clarification on the CGT framework should temper investor sentiment, though cautiousness is expected to persist as market participants await further policy guidance.
Risk-seeking investors may perceive the recent price declines as attractive entry points, particularly in strong-performing equities.
Meristem Research, in its Week-in-View report, projected continued recovery for the Nigerian Exchange Limited, citing the ASI’s partial rebound following the steep Tuesday sell-off.
The firm highlighted that clearer CGT guidance and stable market fundamentals could help maintain investor confidence in the near term.
Additionally, the market’s trajectory in the coming weeks is likely to be influenced by October 2025 inflation data and the Central Bank’s November Monetary Policy Committee decisions regarding benchmark interest rates.
Analysts anticipate that these macroeconomic factors will continue to shape trading patterns on the Nigerian Exchange Limited.
Investor Confidence and Strategic Opportunities
Despite the volatility, the Nigerian Exchange Limited remains a key barometer of investor confidence in Nigeria’s capital market.
Government initiatives, such as the introduction of real estate investment funds and assurances on tax policies, have played a crucial role in supporting the market.
Market participants continue to monitor institutional behaviour closely, particularly in the context of year-end portfolio rebalancing and potential window-dressing by large investors.
Offshore participation remains strong, particularly in banking tickers, signaling continued international interest in Nigeria’s equities market.
Experts suggest that disciplined investment strategies, coupled with careful assessment of macroeconomic policies, can help investors navigate periods of market uncertainty.
In this context, the Nigerian Exchange Limited serves as a critical platform for transparent and regulated trading.
NGX Recovery Signals Resilience
The recent rebound on the Nigerian Exchange Limited demonstrates the market’s capacity to absorb shocks and respond to policy clarifications.
While the initial sell-off highlighted vulnerabilities linked to capital gains tax and institutional trading patterns, the recovery underscores the importance of clear communication and strategic intervention by both the government and market regulators.
As Nigeria approaches the year-end period, investor focus will likely remain on regulatory updates, macroeconomic indicators, and sector-specific developments.
Analysts agree that while risks persist, the Nigerian Exchange Limited continues to offer meaningful opportunities for both domestic and international investors seeking exposure to a dynamic and evolving capital market.
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