The Nigerian Exchange (NGX) All-Share Index (ASI) has recorded a sharp reversal this month after a stellar performance earlier in the year, as profit-taking, tax concerns, and macroeconomic headwinds drag investor sentiment.
Despite a strong rally driven by economic reforms, improved corporate earnings, and renewed investor confidence, the NGX has now lost more than ₦7 trillion in market value in November, signaling potential fatigue in the recent bull run.
On Tuesday, the ASI slipped 0.12% to close at 144,986.51 points, down from 145,159.77, extending its bearish streak. The year-to-date (YTD) return moderated to 41%, while market capitalization fell by ₦110.20 billion to settle at ₦92.2 trillion.
Market data showed that profit-taking in key stocks — including ZENITHBANK (-3.10%), PZ (-2.58%), UBA (-2.51%), NGXGROUP (-1.90%), ACCESSCORP (-1.12%), and OANDO (-0.59%) — largely contributed to Tuesday’s losses. LIVINGTRUST led the laggards, while NCR topped the gainers’ list, trading above its 52-week high at ₦30.95. TANTALIZER recorded the highest trading volume at 58.78 billion units, while ARADEL had the highest transaction value, totaling ₦9.50 billion.
Volatility Returns as Market Pulls Back
The ASI has declined by 3.19% this month, retracing from early-November highs. Analysts attribute the pullback to broad-based sell-offs, particularly in the banking and insurance sectors, where investors are locking in gains amid uncertainty over tax reforms.
The market’s extended rally — which saw some indicators rise 59% year-on-year — has led to growing concerns of overheating, with analysts warning that the market may be entering a consolidation phase.
Tax Reforms Trigger Investor Anxiety
Investor confidence was shaken after reports of a proposed Capital Gains Tax (CGT) increase — from 10% to as high as 25%–30% on gains exceeding ₦150 million, effective January 2026. The proposal sparked panic selling, particularly among foreign investors, causing the All-Share Index to plunge 5.01% on November 11, its steepest one-day loss since March 2010.
Market sentiment began to stabilize after Finance Minister Wale Edun intervened on November 15, assuring investors of consultations and possible exemptions for foreign investments and reinvested profits routed through Central Bank of Nigeria (CBN) channels.
Global and Domestic Risks Weigh on Outlook
Broader global headwinds continue to pressure emerging markets. Persistent interest rate volatility, fluctuations in foreign exchange rates, and renewed geopolitical risks have added to market uncertainty.
Investor concerns also deepened following U.S. President Donald Trump’s warning of possible military action against Nigeria over alleged religious persecution and increasing insecurity, prompting a wider risk-off sentiment among foreign investors in November.
Additionally, frontier economies such as Nigeria are contending with the effects of Trump’s proposed import tariffs of 20%–60% on goods from emerging markets — a move analysts say could further reduce capital inflows.
Other domestic pressures, including rising inflation (16.05% in October), year-end portfolio rebalancing, and the appreciation of the naira to ₦1,438.7 per dollar, have led to a pullback by foreign portfolio investors (FPIs). Major institutional investors have locked in profits from large-cap stocks like Dangote Cement and MTN Nigeria, both of which have recorded significant price declines this quarter.
Cautious Optimism Ahead
Despite the sell-offs, analysts remain cautiously optimistic about the medium-term outlook. The All-Share Index is projected to recover to around 150,000 points by the end of 2026, supported by improving fiscal clarity and resilient earnings in key sectors.
Undervalued banking and insurance stocks, currently trading below book value, are viewed as potential entry points for long-term investors.
Economists also note that Nigeria’s non-oil GDP growth, forecast at 3.6%–4% by 2026, could bolster market fundamentals if ongoing reforms continue. However, they warn that sustained diversification and policy stability will be essential to mitigate global and domestic risks.
After months of strong performance, Nigeria’s stock market has entered a correction phase, with over ₦7 trillion wiped off its value amid tax reform concerns and foreign investor exits. Analysts expect volatility to persist but predict that policy clarity and economic growth could support a rebound in 2026.
