Nigerian Stocks Make Historic Intraday Rebound Amid Easing Tax Concerns

Nigerian Stocks Recover from Worst Plunge in 15 Years as Tax Concerns Ease Nigerian stocks staged a remarkable recovery on Wednesday, with the 151-member NGX All-Share Index rising 3 as of 2:19 p.m. in Lagos, its biggest intraday gain since January 2024. This turnaround came after authorities softened a capital gains tax policy that had spooked foreign investors and triggered a market selloff. The market's rebound was fueled by the government's decision to delay the implementation of a 30% capital gains tax, which was set to take effect next year. This move helped to alleviate concerns among foreign investors, who had dumped shares in anticipation of the tax, leading to a 5% plunge on Tuesday - the steepest decline in 15 years. The NGX All-Share Index, which tracks the performance of the largest and most liquid stocks on the Nigerian Exchange, had plummeted to 43,611.31 on Tuesday, its lowest level since 2017. However, the index recovered some of its losses on Wednesday, closing at 43,625.31. The market's volatility was evident in the performance of individual stocks. Dangote Cement, the largest company on the NGX, fell 4.5% on Tuesday, while Nestle Nigeria, another blue-chip stock, dropped 5.1%. However, on Wednesday, Dangote Cement rebounded by 3.2%, while Nestle Nigeria gained 2.8%. The Nigerian stock market has been under pressure in recent months due to concerns over the government's fiscal policies and the impact of the COVID-19 pandemic on the economy. The market's decline has also been exacerbated by a decline in oil prices, which has reduced the country's revenue and led to a widening budget deficit. The Nigerian Exchange, which is home to 151 listed companies, has a market capitalization of over $70 billion. The NGX All-Share Index has a dividend yield of around 4.5%, making it an attractive destination for income-seeking investors. The government's decision to delay the capital gains tax is expected to boost investor confidence and attract foreign investment into the market. However, the move may also lead to a re-evaluation of the tax policy, which could have implications for the government's revenue projections. As the market continues to recover from its recent plunge, investors will be closely watching the government's fiscal policies and the impact of the COVID-19 pandemic on the economy. The NGX All-Share Index is expected to remain volatile in the short term, but the government's decision to delay the capital gains tax has provided a much-needed boost to investor confidence.