The Nigerian stock market began to show signs of recovery early in December 2025, after a steep monthly decline in November, the first since March, caused by profit-taking and uncertainty surrounding proposed tax reforms, such as a 10 per cent Capital Gains Tax (CGT) on equity investments.
The NGX All-Share Index (ASI) surged 1.20 per cent to close at 144,928.36 points during the first trading session of the week, boosting market valuation by 1.41 per cent to N92.38 trillion and lifting the year-to-date (YTD) return to 40.81 per cent.
The rebound was driven by selective buying in blue-chip stocks like Dangote Cement (up significantly), International Breweries, and NCR Nigeria.
Consequently, the ASI increased on Tuesday by 0.27 per cent (395.51 points) to 145,323.87 on December 3, maintaining the modest bullish momentum and increasing YTD gains to 41.19%.
Industrial goods (+0.47 per cent), consumer goods (+0.38 per cent), and banking (+0.65 per cent) led sector performance, which was generally positive. Guinness Nigeria (+10 per cent) and Nigerian Exchange Group (+9.96 per cent) were the top gainers.
The number of deals increased significantly, indicating concentrated high-value trades rather than widespread participation, while trading volume decreased by 33% to 403.8 million shares.
Policy uncertainties continue to exert downward pressure amid the short-term rally.
Institutional selloffs in stocks like BUA Cement (-4.76% week/week) and Nigerian Breweries (-2.55%) highlight profit-taking amid CGT concerns.
The -6.88% decline of the ASI in November underscores vulnerability to external shocks.
The depreciation risk of the Nigerian currency, despite recent stabilisation, and double-digit inflation, is eroding real returns and may deter foreign inflows in the long term.
Although net foreign reserves significantly increased in the fourth quarter of 2025, they remain under pressure due to high foreign exchange demand from foreign investors.
A “Black Tuesday” meltdown occurred on November 11 amid the implementation of the Capital Gains Tax (CGT), scheduled for January 2026.
Finance Minister Wale Edun’s reassurances helped to restore confidence; however, ongoing reforms may still lead to increased volatility.
Technical indicators, such as the Relative Strength Index, suggest that the market is overextended, following a 283% rally since 2020 and a 37.65% surge in 2024, which raises the risk of a market reversal.
The outlook for the Nigerian Exchange (NGX) this month is cautiously optimistic. The market is expected to continue experiencing positive buying sentiment because of seasonal year-end spending, economic reforms, and opportunities for bargain-hunting.
Foreign portfolio investment inflows have surged by 172% year-over-year, reaching N2.3 trillion through October, supporting market liquidity.
Foreign portfolio investment inflows have surged by 172% year-over-year, reaching N2.3 trillion through October, supporting market liquidity.
However, food inflation, along with currency volatility and global uncertainties, may limit future growth potential.
Diversification: Market professionals recommend spreading investments across key industries such as consumer goods for growth and banking for stability—to mitigate volatility.
The Nigerian Exchange (NGX) and other frontier markets are exciting but often unstable and inconsistent over the long term.
The Nigerian stock market has substantial growth potential due to faster economic growth, resource booms, and policy reforms, though much smaller and less developed than emerging economies like China, India.
Investors should adopt a long-term perspective, as short-term fluctuations like changes in crude oil prices, political shifts, or currency variations can obscure fundamental benefits.
These markets are not designed for quick profits; they require patience and dedication to achieving long-term gains.
Due Diligence: It is advisable to work with SEC Nigeria-approved entities to protect against broker recklessness, investment scams and utilise reputable financial media resources to verify financial information.