Nigeria’s stock market rebounded on Wednesday, November 12 by 2.89 percent or about N2.6trillion as Capital Gains Tax (CGT) lucidity gradually restores investors confidence in the market.
Taiwo Oyedele, chairman, Presidential Fiscal Policy and Tax Reforms Committee on Tuesday issued a tweet clarifying the implementation framework for the new Capital Gains Tax (CGT) regime, thereby bringing much-needed clarity to the market.
As investors gradually return to buy stocks, the market’s returns year-to-date (YtD) printed higher at +41.27 percent. Wednesday’s gain became the first major rally after seven days of negatives on the Bourse. As at close of trading, the NGX ASI rallied to 145,405.39 points (up by 4,076.70 points or +2.89 percent).
All key sectoral indices closed Wednesday in green, led by NGX Banking Index (+7.39 percent), NGX Insurance Index (+6.95 percent), and NGX Oil & Gas Index (+4.11 percent). The market capitalisation increased to N92.477 trillion from preceding day’s N89.9trillion.
Read also: Nigeria likely to review Capital Gains Tax, Edun says
“Prior to the clarification, a dominant concern was that the new CGT would be applied on a historical-cost basis, suggesting that gains accumulated over the years, even before the new law took effect, would be subject to the new CGT upon disposal,” CardinalStone research analysts said.
For listed equities, they noted that the clarification removes an overhang of uncertainty that had contributed to the recent volatility and flight to safety.
“The clarification on applicable cost basis should also potentially bring some relief for institutional investors (e.g. PE firms) who were under pressure to exit investments before the new tax law becomes effective.
“This creates legroom for significant market recovery in sound fundamental stocks that were hit by the recent market panic.
“It reinforces Nigeria’s commitment to transparent and fair fiscal reform, which should bolster investor trust. This point is particularly useful as investors now view the administration as pro-market and proactive,” they said in their November 12 note.
“Importantly, the sound fundamental stories of many coverage companies remain intact. Valuations across key counters remain compelling, supported by a more stable FX environment, declining inflation and yields, and recovering consumer and corporate demand.
BusinessDay had ahead of this development advised investors that the record dip at the Nigerian stock market on Tuesday presents huge buy opportunity for both retail and institutional investors hunting for value to re-enter into the market.
Wale Edun, Minister of Finance and Coordinating Minister for the Economy, had on Tuesday at the Closing Gong Ceremony to commemorate the listing of the Ministry of Finance Incorporated (MOFI) Real Estate Investment Fund (MREIF) Series 2 assured stakeholders that the Federal Government has noted the concerns around Capital Gains Tax and remains committed to ongoing consultation with the market.
“We have noted the concerns around Capital Gains Tax and will continue to engage with the capital market to ensure any decisions deliver optimal outcomes for both Nigerians and the market,” he said.
While liquidity remains robust, stakeholders emphasise that aligning fiscal policy with investor expectations is critical to sustaining confidence and deepening long-term market participation.
Also, Temi Popoola, Group Managing Director/Chief Executive Officer, NGX Group, reaffirmed the capital market’s role as a catalyst for inclusive growth and called on the Federal Government to ensure balanced outcomes in the implementation of the Capital Gains Tax.
He said, “The capital market is not only a platform for attracting investment but also a tool for creating wealth for Nigerians. Policies such as the capital gains tax must be carefully designed to balance government revenue objectives with investor confidence and market growth.”
The listing of MREIF Series 2 took place against the backdrop of cautious trading in the equities market, as investors recalibrate portfolios in response to geopolitical tensions arising from the US–Nigeria diplomatic standoff, the proposed Capital Gains Tax (CGT), year-end portfolio rebalancing, and expectations of window-dressing by institutional players.
The NGX All-Share Index (ASI) saw the highest daily dip in over a decade by 7,454.60 points or 5.01 percent as it closed at 141,327.3 points, its lowest level since mid-September. Also, investors lost about N4.64 trillion, the highest daily dip since 2010.
“The recent pullback is therefore likely to be looked upon as one of the most important entry opportunities into fundamentally sound stocks in the second half of 2025,” CardinalStone analysts further noted.
Read also: Buy opportunities beckon as market correction deepens on CGT fears
The clarifications …
Gains accruing up to December 31, 2025, will be taxed at the current 10 percent CGT rate upon disposal, regardless of when the disposal happens.
“This clarification is likely to bring significant relief to the market, as it removes the urgency to realise accrued gains on assets before the end of the year,” the analysts further said.
“The cost base for existing investments will be reset for future tax computations to the higher of the actual acquisition cost or the closing market price as of December 31, 2025. This critical change effectively puts to rest concerns about historical cost base, as it relates to the implementation of the new CGT,” they further note.
The exemption threshold remains for disposals where total sales proceeds do not exceed N150 million and total gains do not exceed N10 million within 12 months.
Institutional investors (such as Pension Fund Administrators (PFAs), Real Estate Investment Trusts (REITs), and Non-Governmental Organisations (NGOs)), which enjoy Corporate Income Tax (CIT) exemption, will similarly be exempt from CGT.
Taxable gains are subject to certain deductions, including realised capital losses from share disposals, transaction charges, expenses such as margin interest, and realised foreign exchange losses incidental to the investment. Foreign exchange gains will also be treated as taxable income.
Capital gains from foreign share disposals that are repatriated into Nigeria through CBN-authorised channels are also exempt from the CGT.
Following the market’s dip on Tuesday, analysts at Lagos-based Vetiva Research said in their post-trading note on Tuesday that, “Despite the deep losses observed today (Tuesday) and the expectation of further softness tomorrow (Wednesday), key signals suggest a temporary pause in the correction. Specifically, the high closing price of select names, such as MTNN, settling at N431.10 at the tail-end of intraday trading, points to immediate resilience”.
“Therefore, we anticipate that bargain hunting sentiment from both retail and institutional investors will likely emerge, leading to a marginal gain tomorrow (Wednesday) and temporarily halting the current market slide. Our tactical outlook is currently neutral-to-bearish,” the Vetiva Research analysts added.
According to them, “The asset remains below the key resistance at 145,891.30 level, suggesting potential further consolidation or continuation of the downtrend (Neutral Scenario)”.
“The high-risk bearish scenario sees the asset in downside price discovery with no significant underlying support detected. Conversely, a confirmed break and hold above the 145,891.30 resistance, potentially coupled with rising volume, would support initiating new buys in the market,” Vetiva Research analysts added.
Meristem research analysts said in their recent note to investors that notable sell-offs among stocks that have experienced substantial gains will trigger intermittent fund outflows from the market.
“This trend could adversely affect overall liquidity, creating periods of increased volatility. Moreover, uncertainty surrounding the implementation of the Capital Gains Tax (CGT) poses additional risks.
“As institutional and foreign investors may face a significantly higher tax burden compared to retail investors, this disparity could lead to near-term sell-offs by these groups, exacerbating market instability,” Meristem research analysts further said.
At the close of trading on Tuesday, eleven major stocks, including MTN Nigeria, Dangote Cement, BUA Cement, Oando, and Transcorp, reached their daily floor limit of maximum of 10 percent.
The Exchange had already lost N2.83 trillion in the week ending October 31, a sign of growing investor unease. Only three stocks gained, while 65 declined, reflecting broad market capitulation.
Jude Chiemeka, CEO, Nigerian Exchange Limited (NGX), noted that the day’s performance demonstrated the strength of Nigeria’s market operations.
“Today’s strong rebound underscores the efficiency and responsiveness of our market infrastructure. The breadth of participation and surge in trading activity point to renewed investor appetite and growing confidence in the transparency and depth of our market operations. We remain committed to providing a world-class trading environment that supports liquidity, enhances efficiency, and facilitates seamless access to capital for issuers and investors alike.”
