Capital Gains Tax – Stock Market Recovers N2.6trn as Edun and Oyedele Boost Investor Confidence

Nigeria’s Stock Market Rebounds After Tax Policy Clarity

Nigeria’s stock market experienced a strong rebound on Wednesday, regaining approximately N2.6 trillion in market capitalisation with a 2.89 per cent gain. This recovery was driven by clarifications on the new Capital Gains Tax (CGT) regime provided by key government officials, which helped to restore investor confidence.

The market had previously suffered its sharpest single-day decline in 15 years on Tuesday, with a loss of N4.64 trillion in market value in just one day. The market capitalisation had tumbled by N4.641 trillion to settle at N89.885 trillion, while the All-Share Index plunged by 7,454.6 points, or 5.01 per cent, closing at 141,327.30 points.

Investors’ confidence was reassured by the chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, who provided critical clarity on the implementation of the new CGT framework through a series of statements and social media communications. Oyedele emphasized that the CGT reform, which takes effect from January 2026, is designed to strengthen Nigeria’s capital market by promoting fairness and protecting investors rather than discouraging investment.

He dispelled fears by assuring that gains earned on shares before January 1, 2026, will be grandfathered—meaning only gains realised after this date will be taxed under the new law. This transitional arrangement reassures investors that there will be no retroactive taxation on past profits.

Oyedele said the new progressive CGT rates range from zero per cent to 30 per cent depending on income levels, replacing the old flat 10 per cent charge. This structure includes exemptions for small investors and institutions, such as pension funds, Real Estate Investment Trusts (REITs), and NGOs, as well as incentives for reinvestment within 12 months to qualify for full tax exemption. Oyedele stressed that the reform is not aimed at revenue maximisation but at fostering a fair, investor-friendly environment to encourage long-term growth and reduce investment risks.

Government Acknowledges Investor Concerns

Recall that the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, has on Tuesday acknowledged investor concerns about the CGT during the listing of the Ministry of Finance Incorporated (MOFI) Real Estate Investment Fund on Tuesday. He assured stakeholders that the government is listening, analysing feedback, and is committed to making decisions that optimise benefits for Nigeria.

Edun’s promise of a consultative review process has been well received by the market, contributing to the rebound after recent heavy losses linked to fears over the tax increase.

The government’s move to triple the CGT rate for foreign equity investors from 10% is seen as a significant factor behind the recent volatility. However, the assurance that reforms will be balanced and mindful of market realities offers hope of stabilising the market and encouraging further participation.

Calls for Balanced Reforms

At the Moneyline Investment Forum held in Abuja on Tuesday, Akwa Ibom State Governor, Pastor Umo Eno, and Senator Osita Izunaso, Chairman of the Senate Committee on Capital Market and Institutions, emphasised the need for careful and balanced implementation of fiscal and financial reforms.

Governor Eno, represented by his Commissioner for Information, highlighted the importance of aligning government policy with the interests of the people, emphasizing that reforms must translate into tangible benefits for citizens and businesses. He also stressed the importance of synergy between fiscal reform and financial education to ensure sustainable growth, citing Akwa Ibom State’s ARISE Agenda as a successful example of subnational economic development that contributes to national goals.

Senator Izunaso expressed concerns about recent market downturns caused by the anticipated CGT hike. He called for mechanisms that address investor concerns while safeguarding government revenue objectives without destabilising the capital market. Izunaso reaffirmed the Senate’s commitment to legislative reforms, including the Investment and Securities Act (ISA) 2025, which aims to deepen market participation, enhance inclusivity, and support Nigeria’s $1 trillion economic ambition by 2030.

Market Recovery and Positive Outlook

Meanwhile, the Nigerian equities market rebounded strongly yesterday, driven by bargain-hunting in blue-chip stocks, with the market capitalisation rising by N2.593 trillion, reflecting renewed buying momentum.

The All-Share Index (ASI) gained 4,076.53 points, representing a gain of 2.88 per cent to close at 145,403.83 points. Additionally, market capitalisation increased by N2.593 billion to close at N92.478 trillion.

The upturn was driven by price appreciation in large and medium-capitalised stocks, including Aradel Holdings, MTN Nigeria Communications (MTNN), NASCON Allied Industries, Nigerian Aviation Handling Company (NAHCO), and Guaranty Trust Holding Company (GTCO).

On market outlook, Afrinvest Limited said, “We expect the bourse to sustain its positive close to trading activities as investors hunt for fundamentally solid stocks amidst the policy pause on controversial capital gain tax.”

Market breadth was decisively positive, as 65 gainers overwhelmed 11 decliners. Access Bank, Ecobank Transnational Incorporated (ETI), GTCO, AXA Mansard Insurance, Nigerian Breweries, Oando, PZ Cussons Nigeria, Royal Exchange, Sovereign Trust Insurance, Wapic Insurance and Zenith Bank emerged as the highest price gainer of 10 per cent each to close at N22.00, N34.65, N85.80, N13.31, N66.00, N39.60, N38.50, N1.87, N2.86, N2.86, N59.40, respectively, per share.

NAHCO followed with a gain of 9.99 per cent to close at N96.90, while NASCON Allied Industries advanced by 9.98 per cent to close at N103.60 per share.

On the other hand, Vitafoam Nigeria, Transcorp Power, and Austin Laz & Company led others on the losers’ chart, with 10 per cent each, closing at N84.60, N307.80, and N2.61, respectively, per share.

Red Star Express followed with a decline of 9.80 per cent to close at N9.20, while Abbey Mortgage Bank shed 9.72 per cent to close at N6.50 per share.

The total volume traded increased by 22.94 per cent to 806.399 million units, valued at N50.778 billion, and exchanged in 24,509 deals. Transactions in the shares of GTCO led the activity with 104.780 million shares worth N8.990 billion. Zenith Bank followed with account of 86.806 million shares valued at N5.156 billion, while Stanbic IBTC Holdings traded 43.627 million shares valued at N4.580 billion.

Access Holdings traded 35.931 million shares worth N789.581 million, while FCMB Group traded 35.508 million shares worth N366.186 billion.