How To Invest In The Nigerian Stock Market

The Nigerian Stock Exchange (NSE) is one of the leading stock markets in the world. The NSE is the largest local bourse market in Africa with a Market Capitalization of N13.66 trillion as of Friday, 28th February 2019.

The Nigerian Stock Market boosts of both large and medium scale capitalized companies such as MTN Nigeria Communications Plc, Dangote Cement Plc which is one of the leading cement companies in the world. Others include; Airtel Africa, Guaranty Trust Bank, Seplat Petroleum, Access Bank, Nigerian Breweries, Stanbic IBTC Bank, Nestle Plc, Zenith Bank amongst others.

Investing in the Nigerian Stock Exchange (NSE) which was formerly known as the Lagos Stock Exchange (LSE) has been made easier over the years with the advancement of technology, periodical reviews, and modifications.

A lot of improvements and modifications have been made over the years by the Securities and Exchange Commission (SEC), The Central Bank of Nigeria (CBN), amongst others regulating bodies to improve the tradings on the nation’s bourse market.

The stock exchange market just like every other business is a great platform to make cool cash legitimately without being at the frontier. Just like Wall Street, you invest when the market bleeds and sell when everyone is buying. The local bourse market just like its counterparts is influenced greatly by the forces of demand and supply.


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Terminologies That Stock Market Investors Should Know

Stockmarket: A stock market is a designated market for trading various kinds of securities such as shares, and bonds, amongst others in a controlled, secured, managed and regulated environment.

Bear market: Its a market in which listed companies share prices are falling.

Bull market: Its a market in which shares prices are rising.

Bourse: Its another name for a stock market.

All-Share Index (ASI): Shows the average changing value of all the listed companies stocks at a glance. It also shows the overview performance of the stock market over a given time.

Market Capitalization: Its the value of a listed company on the stock market.

Market Breadth: Analyzes the total number of advancing stocks relative to the total number of declining stocks.

Interim Dividend: Its the dividend paid before the company’s Annual General Meeting (AGM) and preceding the disclosures of its Full Year financial results to the public

Final Dividend: Its a dividend declared at the end of the company’s fiscal year. The final dividend is declared after the company’s Annual General Meeting (AGM).


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Chronological Order On How To Invest In The NSE

  1. Contact A Stock Broker: The first step is to contact a stockbroker. The stockbroker serves as a link or middleman between the company selling its shares and their potential investors. Leading stock brokerage firms in Nigeria include ARM Securities, CardinalStone, Zenith Securities, Stanbic IBTC, amongst others. Fill and complete the Central Securities Clearing System (CSCS) Account form.

 The CSCS account has an assigned number that helps to keep track of the investors’ transaction records. Two recent colored passports, valid residential address, Banking details, utility bills such as electricity or water bills are also needed in order to open the brokerage account.

An investor can also create these accounts by simply downloading the stockbrokers’ mobile application from the Google Playstore and Email the aforementioned requirements to them or send them through courier services such as NIPOST, DHL or FedEx.   

2. Fund The Stockbroker’s Account: The next step is to fund the broker’s account. At this stage, the investor is to fund the broker’s account in order to start trading.

 3. Start Trading: The final step is to submit a trade order and start trading. Before one should start trading, it is highly recommended to seek professional and technical advice from a financial expert such as from the brokerage firm or any other financial expert. The brokerage firm will advise the broker on when to buy, sell or hold shares.

The investor can also learn how to trade on the Nigerian Stock Exchange without going through these various stages. It’s also recommended for one to learn the intrinsic and basis of the stock market tradings without trading with money. One can trade through Demo by simply downloading a financial market resource application called Yochaa from the Google Playstore. The Yochaa App serves as a great resource for beginners to learn how to trade rather than for them to learn by losing their money.

It is also recommended to learn stock market trading by trading with smaller amounts and test the waters instead of investing hugely on the market with little or no experience.   


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Author: FMN

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