Understanding the Drivers Behind the NGX Decline in November 2025
Nigeria’s capital market closed November 2025 with a sharp downturn, marking the first negative monthly performance on the Nigerian Exchange Limited since March.
The NGX decline—a -6.88 per cent fall in the All-Share Index—reflected a mix of aggressive profit-taking, investor panic over capital gains tax policy, and global political tension.
It also erased roughly N6tn in market value, reducing total capitalisation from N97.58tn at the beginning of the month to N91.29tn at the close.
This reversal came after months of strong bullish momentum.
October had delivered an 8.00 per cent gain, while September and July posted 1.31 per cent and 16.57 per cent respectively.
The November slump therefore caught many investors off-guard, arriving at a time when analysts had projected sustained year-end strength.
Market activities early in the month took a dramatic turn after geopolitical concerns flared, particularly following remarks by United States President Donald Trump hinting at possible military action against Nigeria.
The reaction was swift and severe, wiping off N2.84tn in a single trading day.
With investor confidence already shaken, the subsequent debate over potential changes to the Capital Gains Tax regime triggered further sell-offs, deepening the NGX decline.
One of the most significant market routs occurred on Tuesday, November 11, now described by analysts as the worst trading session since 2010.
The ASI plunged by 5.01 per cent to 141,327.30 index points, driven by heavy sell-offs in key blue-chip stocks. Dangote Cement, MTN Nigeria, and BUA Cement each shed 10 per cent, while Aradel and GTCO recorded notable declines.
The wipeout resulted in an additional N4.64tn loss, compounding the negative sentiment that defined trading throughout November.
As panic continued to spread, the Federal Government intervened.
Speaking during a Closing Gong Ceremony at the NGX, the Minister of Finance and Coordinating Minister for the Economy, Wale Edun, sought to calm the market.
He assured stakeholders that discussions on the capital gains tax were still ongoing and that the final outcome would support both national interest and investor stability.
His reassurance temporarily soothed tensions, allowing for pockets of positive trading sessions. However, this was not enough to reverse the broader bearish trend.
In its monthly review, AIICO Capital attributed the prolonged NGX decline to persistent sell pressure, particularly in large-cap stocks, combined with the Monetary Policy Committee’s unexpected decision to maintain the benchmark interest rate at 27.00 per cent.
According to the firm, the rate hold signaled tighter monetary conditions, prompting portfolio realignments and cautious trading. As a result, the market’s year-to-date performance moderated to 39.4 per cent.
Cowry Asset Management analysts echoed similar observations, noting that the MPC’s stance often triggers movement into fixed-income instruments, especially toward year-end when investors reassess risk exposure.
The firm described November’s trading mood as a “delicate balance between caution and emerging pockets of optimism,” given lingering macroeconomic concerns such as inflation, FX volatility, and elevated borrowing costs.
Coronation Research, in its weekly update, revealed that despite posting gains in three trading sessions in the final week of November, the ASI still slipped by 0.14 per cent week-on-week.
The decline marked the fifth consecutive week of bearish performance, driven largely by sell-offs in highly capitalised and mid-tier counters such as BUA Cement, UBA, Oando, and Nigerian Breweries.
Gains recorded by MTN Nigeria and tier-one lenders like GTCO, Access Holdings, and FBNH were insufficient to offset broad market weakness.
Sectoral performance further underscored the depth of the downturn. Except for the Banking Index—which closed the week 0.67 per cent higher—the Industrial Goods, Consumer Goods, Oil and Gas, and Insurance indices all ended in negative territory.
Analysts attributed the banking sector’s resilience to bargain hunting and investor positioning ahead of the Q1 2026 dividend season.
Providing deeper insight into the frenzied sell-offs, the Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, described November 11 as “Black Tuesday,” emphasising that the panic was driven more by misinformation than by economic fundamentals.
Oyedele argued that fears around capital gains tax were exaggerated, noting that Nigeria’s total capital gains tax collection in the previous year amounted to only N52bn—far too small to justify the massive N4.6tn loss triggered by panic selling.
He further argued that the market had failed to communicate emerging positive reforms effectively, such as the impending reduction of corporate tax from 30 per cent to 25 per cent starting January 2026.
According to him, this reform should have boosted investor sentiment, yet the broader conversation was overshadowed by unverified fears.
Touching on demographic trends, Oyedele pointed out that Nigeria’s capital market remains dominated by older investors, with the average age around 55.
He highlighted that younger Nigerians now invest more heavily in virtual assets and crypto—an estimated $60bn market—despite lower returns and taxable conditions.
In contrast, the equities market offers higher returns in dollar terms with no tax obligations, presenting untapped opportunities for younger investors.
Market Outlook Amid the Continuing NGX Decline
Despite the turbulence, analysts maintain a cautiously optimistic outlook for December and early 2026.
AIICO Capital projects that bargain hunters will take advantage of the depressed prices, especially in fundamentally strong stocks, setting the stage for a possible year-end rally.
Nonetheless, ongoing debates around the 2026 Capital Gains Tax implementation could still weigh on sentiment.
Cowry Asset Management forecasts a continued cautious tone in the market but anticipates selective accumulation among strategic investors preparing for dividend payouts.
Coronation Research shares a similar view, projecting mild rebounds supported by renewed institutional interest in large-cap stocks.
In summary, while the NGX decline in November 2025 marks a significant correction after months of strong gains, analysts consider it a temporary market recalibration rather than the start of a prolonged bear cycle.
With policy clarity expected in the coming weeks and year-end trading patterns historically favoring recovery, investors remain watchful for the next major market catalyst.
