•Investors lose N247bn as threat triggers market sell-off
By Seun Ibiyemi
The Centre for the Promotion of Private Enterprise (CPPE) has raised concerns over the potential economic fallout of the recent threat of military action against Nigeria by former U.S. President Donald Trump.
The policy think-thank warned that the threats by the American President could undermine investor confidence and destabilize the country’s financial markets.
In its latest policy brief titled “Potential Economic Implications of the U.S. Threat of Military Action on Nigeria,” the CPPE said the remarks, though based on “incomplete intelligence and misjudged assumptions,” have already triggered negative perceptions about Nigeria’s stability as an investment destination.
The Director and Chief Executive Officer of CPPE, Dr. Muda Yusuf described Trump’s comments as “unwarranted, counterproductive, and economically destabilizing.”
He noted that such rhetoric from a U.S. president carries immense global influence and could have significant repercussions on Nigeria’s economy and international relations.
According to the report, the threat could lead to capital flight, a decline in foreign direct investment (FDI), and rising country risk premiums as investors reassess Nigeria’s risk profile.
The CPPE further warned that the development could result in falling stock market valuations, higher sovereign bond yields, and depreciation of the naira due to capital outflows.
“Even the mere threat of military action by a global superpower has inflicted significant reputational damage on Nigeria’s image as a safe and viable investment destination,” the brief stated.
The organisation also highlighted broader macroeconomic risks, including rising interest rates, weaker currency performance, inflationary pressures, and reduced foreign reserves. It said the uncertainty could force investors to delay or cancel major projects while diverting capital to other African or Asian economies with lower perceived political risk.
CPPE stressed that Nigeria’s internal security challenges are complex and multi-dimensional, involving insurgency, communal clashes, and criminality rather than any government complicity or religious bias.
“Any external actor contemplating military intervention must understand the nuanced nature of these issues,” the policy paper added.
To mitigate the potential damage, CPPE urged the Nigerian government to engage in urgent diplomatic discussions with the U.S. to clarify facts and ease tensions. It also called for a coordinated communication strategy to reassure investors of the country’s stability and reinforce ongoing reforms in governance, transparency, and macroeconomic management.
Dr. Yusuf cautioned that a U.S.-led military intervention would be “a disproportionate response” that could destabilize Nigeria and the West African region.
“The constructive path forward lies in diplomacy, partnership, and mutual respect for sovereignty,” he said.
The CPPE concluded that while Nigeria must continue to strengthen internal security and governance systems, the focus should remain on cooperation not confrontation to preserve investor confidence and economic stability.
Meanwhile, Nigeria’s equities market suffered a sharp decline on Monday, with investors losing about N247 billion in market value, following heightened geopolitical tensions sparked by former United States President Donald Trump’s threat to invade Nigeria.
The Nigerian Exchange Limited (NGX) All-Share Index (ASI) fell by 0.25 percent, closing at 153,739.11 points, compared with 154,126.46 points recorded on Friday.
Similarly, market capitalisation dropped from N97.829 trillion to N97.582 trillion, wiping off roughly N247 billion from investors’ wealth in a single trading session.
The decline, which came on the first trading day of November, reflected investors’ swift reaction to Trump’s inflammatory remarks over the weekend.
The former U.S. president had designated Nigeria as a “Country of Particular Concern” and threatened to cut off all U.S. aid while ordering the Pentagon to “prepare for a possible action” against what he described as “Islamic terrorists committing genocide against Christians.”
The threats, issued on Trump’s official X handle, sent shockwaves through the Nigerian investment community and global markets.
Analysts say the statements have raised concerns over Nigeria’s political stability, foreign relations, and the broader implications for capital inflows into the country.
The 0.25 percent dip, though seemingly modest, was significant given the strong performance of the market in recent months, which had pushed year-to-date (YtD) returns to +49.37 percent before Monday’s reversal.
The loss also underscores the sensitivity of Nigeria’s financial markets to external political developments and risk perceptions.
Before the incident, investor sentiment had been upbeat. Analysts at Futureview Research had projected a rebound in the equities market this week, citing renewed interest in undervalued stocks, upbeat expectations for third-quarter earnings, and improving liquidity conditions.
“Broader sentiment should remain positive as investors position ahead of year-end portfolio rebalancing,” the firm had said.
Similarly, Coronation Research analysts, in a pre-market note, had anticipated “a mild bullish tone driven by bargain hunting” after the positive close to last week’s trading sessions.
CardinalStone Research also maintained an optimistic stance, stating that it would “continue to monitor post-earnings market reactions and reassess positioning accordingly to ensure portfolios remain strategically aligned for optimal returns.”
However, Trump’s sudden and aggressive rhetoric disrupted those forecasts, sparking widespread caution among both domestic and foreign investors. Traders say the renewed uncertainty prompted profit-taking in several large-cap stocks, especially those heavily held by foreign investors.
Financial analysts warn that the escalation of diplomatic tensions could threaten Nigeria’s reform progress and weaken confidence in its macroeconomic stability, particularly at a time when the government is working to attract new foreign capital and stabilise the naira.
“The risk premium on Nigerian assets could rise sharply if the political situation deteriorates further,” one Lagos-based market analyst observed.
“Such developments could deter portfolio inflows and potentially slow the momentum that has supported market recovery over the past months.”
As the market digests the potential fallout from Trump’s comments, attention will turn to how Nigerian and U.S. authorities respond diplomatically to ease investor concerns. Until then, analysts expect trading sentiment to remain cautious, with possible volatility in coming sessions