Investing in the Nigerian Stock Market
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Posted by Felix Okoli on April 20, 2010 at 06:57:04:
The Nigerian stock market for a few years back has emerged as the fastest growing stock exchange in Africa and the most profitable, although, recently, this has slowed down due to banking reforms that has caused credit suqeeze in the financial sector. The period of boom enabled a lot of middle-class investors to make considerable gains from their, mostly, credit backed portfolios adn diversifiying the gains to other investments like real estate and automobiles.
The Boom
Certain stocks that were initially priced at say N2 grew to N10 in a period of 3 months after an initial public offer and that period witnessed a lot of companies coming out for public offers just to catch the ever ready investing public. Knowledge for and participation in stock investment grew especially during that time and this caused even many new startup small business to focus on just the Nigerian stock market and they were able to build a large pool of client funds in their portfolio.
The Slowdown
Although with current regualations and financial squeeze in the banking industry under Sanusi's (CBN governor) tenure, activities at Nigeria's stock market have considerably slowed down, most once highly priced stocks are at their bottom prices again but it appears that the real problem now is not if it would be a good investment, since it really is. Rather, the issue is that of liquidity and there is no better time than now to buy into Nigeria's stock market. Stocks are at their par value and many stock prices have reduced by more than 50%.
For instance, I remember when Fidelity bank shares were once at N12.50(<$0.1) and a lot of people invested in it, but now the price has gone low to N2(<$0.02) and this is a good stock to buy given it's few financial commitments and balance sheet reports. Another good stock to buy is Spring bank which has just released it report and is showing that it's already on it's way to profitability - The price is at N1($0.01) even though it was once at N5.99. It cannot get any lower than this and it still remains a good stock to buy.
How to get started
To get started with investing in Nigeria's stock market, what you need to do is:
1. Have the funds to buy. Although, you can start with any amount say from N10,000, some top brokerage firms prefer to deal only with clients who desire to invest from N200,000 ($1500) only.
2. Identify the desired stock you want to buy
3. Approach a registered stockbroking firm and fill the application form
4. Pay a cheque to the firm (it is safer) for the said amount. You should include a 4% agency fee of your total worth of the transaction
5. Your application would be processed within 3 days and it would be credited to your cscs account.* You can monitor your stocks with a CSCS online access account which you could apply for and it costs and annual fee of about N2500 only.
Comments:
The Nigerian stock market for a few years back has emerged as the fastest growing stock exchange in Africa and the most profitable, although, recently, this has slowed down due to banking reforms that has caused credit suqeeze in the financial sector. The period of boom enabled a lot of middle-class investors to make considerable gains from their, mostly, credit backed portfolios adn diversifiying the gains to other investments like real estate and automobiles.
The Boom
Certain stocks that were initially priced at say N2 grew to N10 in a period of 3 months after an initial public offer and that period witnessed a lot of companies coming out for public offers just to catch the ever ready investing public. Knowledge for and participation in stock investment grew especially during that time and this caused even many new startup small business to focus on just the Nigerian stock market and they were able to build a large pool of client funds in their portfolio.
The Slowdown
Although with current regualations and financial squeeze in the banking industry under Sanusi's (CBN governor) tenure, activities at Nigeria's stock market have considerably slowed down, most once highly priced stocks are at their bottom prices again but it appears that the real problem now is not if it would be a good investment, since it really is. Rather, the issue is that of liquidity and there is no better time than now to buy into Nigeria's stock market. Stocks are at their par value and many stock prices have reduced by more than 50%.
For instance, I remember when Fidelity bank shares were once at N12.50(<$0.1) and a lot of people invested in it, but now the price has gone low to N2(<$0.02) and this is a good stock to buy given it's few financial commitments and balance sheet reports. Another good stock to buy is Spring bank which has just released it report and is showing that it's already on it's way to profitability - The price is at N1($0.01) even though it was once at N5.99. It cannot get any lower than this and it still remains a good stock to buy.
How to get started
To get started with investing in Nigeria's stock market, what you need to do is:
1. Have the funds to buy. Although, you can start with any amount say from N10,000, some top brokerage firms prefer to deal only with clients who desire to invest from N200,000 ($1500) only.
2. Identify the desired stock you want to buy
3. Approach a registered stockbroking firm and fill the application form
4. Pay a cheque to the firm (it is safer) for the said amount. You should include a 4% agency fee of your total worth of the transaction
5. Your application would be processed within 3 days and it would be credited to your cscs account.* You can monitor your stocks with a CSCS online access account which you could apply for and it costs and annual fee of about N2500 only.
Comments:
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Re: Investing in the Nigerian Stock Market
Posted by Sola
on May 02, 2010 at 14:36:07:
Will the stock market ever appreciate in the short term giving that CBN has made shares unacceptable as a form of collateral?
Re: Investing in the Nigerian Stock Market Posted by Felix Okoli on May 02, 2010 at 14:37:42: Actually I wonder why they made it like that. Stock prices have kept on falling and I don't see it rising very soon. Unless you are investing for the long term
Re: Investing in the Nigerian Stock Market Posted by Chuks on May 02, 2010 at 14:39:53: This is really the best time to invest, the only problem is that there is hardly any liquidity due to economic squeeze from all angles
Re: Investing in the Nigerian Stock Market Posted by ALABI BABATUNDE on July 10, 2010 at 02:04:54: pls i want to invest for a short period which share is preferable for short time investors.
Re: Investing in the Nigerian Stock Market Posted by Felix Okoli on July 10, 2010 at 02:04:54: Well if you really want to invest for short term, I would advise you to invest in bank stocks for now, especially those banks that are not troubled. I suggest buying into stocks like Fidelity bank, Sterling bank, UBA or even Intercontinental bank.
Re: Investing in the Nigerian Stock Market Posted by ALABI OLUWASEYI on July 11, 2010 at 10:04:34: i have #50,000 and i want to invest for jst 2 months. apart from banking sector which stock in specific can u prescribe?
Re: Investing in the Nigerian Stock Market Posted by Felix Okoli on July 11, 2010 at 10:04:34: I can't really advise you on which stocks you could invest in for just two months.
Secondly, using N50,000 for short term investment of 2 months? It may not be too realistic.
Anyway, if I was in your shoes want to invest outside banking stocks, going for insurance stocks like Goldlink and Cornerstone Insurance would be a safe bet.
Other stocks you could look into are May and Baker and Eterna Oil and gas which are at about N6.3 and N7 respectively. You should also consult your broker before making a final decision
Re: Investing in the Nigerian Stock Market Posted by TUNDE JOHN on October 14, 2010 at 23:16:11: Pls i want 2 ask if the stock's price is going to rise again and is it adviceable to buy stock now or is the price goin to fall more than this?
Re: Investing in the Nigerian Stock Market Posted by Felix Okoli on October 14, 2010 at 23:16:11: This is the best time to buy since it is not yet peak period. Stock prices rise mostly during the first quarter of the year like from Feb to April but fall from Oct to Dec. You can start buying stocks now till december in anticipation for profit by early next year.
Re: Investing in the Nigerian Stock Market Posted by tony Elekwachi on October 22, 2011 at 03:59:59: Which other sectors performs well i̶̲̥̅̊n̶̲̥̅̊ first quarter part from banking sector?
Re: Investing in the Nigerian Stock Market Posted by Tony elekwachi on October 22, 2011 at 04:19:19: Which company is likely going to declare dividend or bonus soon?