Stock Exchange

How to trade Stocks in Nigeria? A beginners’ guide

The trend of stocks trade has been steadily picking up throughout the world since the advent of electronic trading in 1970.

READ ALSO: Access Bank: Race for Continental Expansion

In the past decade, there has been increased participation of the millennials in the Stock market through online trading apps like Robinhood and E-Trade which has given boost to trading figures.

Nigeria too has seen growing interest in online trading with both millennials and older stock traders using local trading platforms.

But it has been noticed that many new traders generally tend to ignore the basics and risk factors related to trading while trying to book significant profits in turn they end up losing money. To make better profits, it is important to understand the details of the stock market and guidelines related to stock trading.

Below is our complete guide for the beginners to start stock trading in Nigeria.

What are Stocks or Shares?

A stock or share represents the ownership of the company or corporation. Owning shares of any company means that the shareholder owns a part of the company’s or corporation’s asset and earnings.

All the shares that are held by external investors of a company are called outstanding shares. Suppose if a company has 500,000 outstanding shares, then owning 50,000 shares means owning 10% of the stakes in the company.

Any company or corporation that exists in the world is either public or private. A private company is generally owned by a few individuals who can be founders, management, or private investors. A public company is a company in which common people or general public can own stakes besides the company promotors or founders – by buying a portion of shares offered in an initial public offering or through

Stock exchange.
For example, Aliko Dangote owns shares of Dangote Group, Elon Musk owns shares of Tesla. In simple terms, if you wish to own a part of any company, you will buy its shares.

The value of these shares keeps changing due to the performance of the company and many other factors. The frequent buying and selling of shares with an aim to book profit is called as stock trading. 
How Does Stock Trading Work?

The act of buying and selling of shares from stock exchange with expectations to book profit is called stock trading while accumulating the stocks for a long term is called stock investing. Traders who generally buy and sell the stocks on the same day are known as day traders.

A Stock exchange is a secondary market where all major shares of public companies are traded.

Exchange matches the potential buyers and sellers of shares of listed companies on the exchange. This means that if you buy shares of any company, you are buying from other shareholders who want to sell through the stock exchange.

For example – Tesla, Microsoft, Alphabet, Guaranty Trust Bank Plc are traded publicly on stock markets and investors can buy & sell them on exchange.

Only Public Companies are allowed to trade publicly on a stock exchange that means outside investors or general public can invest in them through stock market. This is a way for companies to raise capital for business expansion or raise initial funding in case of IPO. Every new company has to register itself through Initial Public Offering (IPO) on an exchange.

Investors normally earn income from company’s profits as dividends or by speculation on share value as day trading or value investing in the stock exchange.

Individuals can buy and sell shares of any listed company at varying prices from the stock market.

Companies are not allowed to take part in stock trading but they can buy back their own shares or issue more stocks.


Nigerian Exchange Group

Stock Market Gains N88.980, Ends Week Bullish

The Nigerian Stock market sustained its recovery Friday as the Nigerian Exchange Group (NGX) closed the week bullish and the All-Share Index and Market Capitalization appreciated170.02 index point and N88.980 billion respectively.

READ ALSO: Charting A New Course for Venture Capitals and Early-Stage Funding

The ASI appreciated by 0.43 percent to close at 39,301.82 basis point, having opened trading for the session at 39,131.80 basis point, while the market capitalisation jumped to N20.568 trillion from N20. 479 trillion, also representing a 0.43 percent growth.

The Equities market was largely impacted by the rise in the value of Sovereign Trust Insurance Plc , Stanbic IBTC Bank, Tripple Gee and Company Plc, Academy Press and Regency Assurance Plc.

The day’s transaction saw the stock market turnover increasing by 25.83 percent, as 287. 038 million shares worth N 3,038 billion in 3,578 deals as against 228. 111 million shares valued at N 2. 635 billion in 3,656 deals bought and sold by investors on Thursday.

The market breadth was massively positive with Nine laggard equities as against 32 stocks advancing.

The gainers’ table was dominated in percentage terms by Tripple Gee, surging by 9.23 percent to close at N0. 71 Kobo per share.

Sovereign Trust Insurance and Stanbic IBTC Bank rose by 8.70 percent to close at N0. 25 Kobo and N50 per share respectively.

Also, Academy Press Plc jumped 8.11 percent to close at N0. 40 Kobo per share, while Regency Assurance Plc climbed 8 percent to close at N0. 27 Kobo per share

Conversely, the laggard’s log was led in percentage parameters by Union Dicon Salt Plc, losing 9.59 percent to close at N9. 90 Kobo per share.

Linkage Assurance dipped 4.76 percent to close at N0. 80 kobo per share, while Cornerstone Insurance Plc Plc declined 3.70 percent to close at N0. 52 Kobo per share.

FTN Cocoa Plc fell by 2.50 percent to close at N0. 39 Kobo per share, while Northern Nigeria Flour Mills Plc completed the top five losers’ table when it shed 0.83 percent to close at N5. 95 Kobo per share.

Access Bank was the most active stock in volume terms, trading 46.788 million shares valued at N351. 758 million, while Guaranty Trust Bank closed trading as the most valuable equity at N1.333 billion.



Why SEC banned investment technology platforms from offering foreign stocks to Nigerians

  • Some big-name investment technology platforms that allow Nigerians to invest and trade in stocks listed on the Nigerian and foreign stock exchanges have been declared illegal by the Federal Government.
  • A circular issued on April 8 2021, by the Nigerian Securities and Exchange Commission warned unregistered investment tech platforms against providing foreign securities.
  • Chaka, Trove, Bamboo, and Risevest are among the investment tech platforms required to secure a license before continuing operations.

What’s the issue?

The Securities and Exchange Commission (SEC) on Thursday issued a directive on the “proliferation of unregistered online investment and trading platforms” in the country, declaring that only foreign securities listed on any Exchange registered in Nigeria may be issued, sold or offered for sale or subscription to the Nigerian public.

In other words, foreign stocks such as Microsoft, Tesla, Amazon, Netflix, which are currently not listed within Nigerian jurisdiction, should not be offered to Nigeria-based residents and businesses.

Why did SEC ban investment technology platforms from offering foreign stocks to Nigerians?

The SEC is using its jurisdiction to remind participants and investors that only approved securities can be sold to the Nigerian public.

Sections 67-70 of the Investments and Securities Act (ISA), 2007 and Rules 414 & 415 of the SEC Rules and Regulations, states that only foreign securities listed on any Exchange registered in Nigeria may be issued, sold or offered for sale or subscription to the Nigerian public.

In the circular issued, the SEC added that “CMOs who work in concert with the referenced online platforms are hereby notified of the Commission’s position and advised to desist henceforth.

The Commission enjoins the investing public to seek clarification as may be required via its established channels of communication on investment products advertised through conventional or online mediums.”

According to Techcabal, the SEC’s action is within its powers, and in fact, these rules show that the investment-tech model of offering foreign stock to Nigerians is illegal. But this is hardly an indictment of these startups; it’s instead a reflection of how fast innovation moves.

Critics also say that the new directive by the SEC is because of the surging shares of big tech companies such as Amazon, Microsoft, Apple, Netflix and Google-parent Alphabet that have all led the market higher in recent weeks. Young Nigerians have been leveraging these new investment tech service providers to help diversify their portfolios, and with as little as $5, anyone can get in on the action happening outside the Nigerian Stock Exchange.

Who would be affected?



Demutualization of NSE: Innovative Products Key to Deepening Capital Market

With the Demutualization of the Nigeria Stock Exchange (NSE) concluded, innovative products that appeal to millennials and attract retail investors will go a long way in deepening the capital market.

READ ALSO: FG Set To Give N30,000 Loan To 330,000 Artisans

Mr. Patrick Ezeagu the Chairman of the Association of Securities Dealing Houses of Nigeria (ASHON) made this point in a conversation on the “Post-Demutualization of NSE: Opportunities for the Capital Market”.

Ezeagu noted that the process for demutualization took over 7 years before actualization and commended all the stakeholders involved for their resilience.

He said Nigeria now joins the ranks of South Africa with demutualized exchanges and opens opportunities for the growth of a more integrated African capital market.

According to him demutualized exchanges especially in Africa, could collaborate and operate as a single hub to attract capital and investments.

Speaking further he said brokers have to be innovative and strategic in developing products that appeal to all classes of investors and can improve the capitalization of the exchange.

The Chairman of ASHON agreed that the “Demutualization of the NSE” will improve the market in areas like technology, human capital, and processes.

“The three subsidiaries formed as a result of the demutualization of the Exchange are the Nigerian Exchange Limited (NGX), NGX Regulation Limited (NGX REGCO), and NGX Real Estate Limited  (RELCO), would bring efficiency to the market and make the exchange focus on its core mandate,” he said.

He added that Africa needs a connected capital market that can compete globally with the dispensation of the AFCFTA (African Continental Free Trade Agreement).

Looking at the sub-region he pointed out that there has been an existing model of the West Africa Market Integration, WAMI which can be expanded to the entire continent.

The capital market trade group leader said with the demutualization of the Exchange it was possible to achieve a market capitalization of about $200bn by 2022.

He advised the Federal Government to leverage the capital market to raise funds, liberalize state assets and corporations to be profitable ventures.

The Nigerian Stock Exchange (Formerly Lagos Stock Exchange) was founded on 15 September 1960 and began operations on 25 August 1961.

In a bid to catch up with the needed efficiency to take its place as the leading Exchange on the African continent, members had agreed at an Extraordinary General Meeting in 2017 to demutualize the Exchange. A decision that became more pronounced as the demutualization bill became law in August 2018. Demutualizing the Exchange changed it from its earlier status as a non-profit organization limited by guarantee into a public company.



Zenith Bank, GTB, Union Bank Lift NSE Banking Index By 2.09%

Growth in the share price of Zenith Bank Plc, Guaranty Trust Bank (GTB) and Union Bank of Nigeria Plc lifted the banking index of the Nigerian Stock Exchange (NSE) by 2.09 percent during trading for the past week.

READ ALSO: Nigerians rise against $1.5bn Port Harcourt refinery repair bill

The Banking Index which measures the performance of Nigerian banks on the NSE closed at 361.13 index point on Friday, March 19th from the 353.75 index point it commenced trading with on Monday, March 15th, surging by 7.38 index point, representing 2.09 percent appreciation. The banking index, however, fell by 8.11 per cent Year- till – Date (YTD)

The Financial Services Industry which includes the banking sector (measured by volume) led the activity chart with 1.888 billion shares valued at N12.446 billion traded in 12,019 deals, while a total turnover of 2.342 billion shares worth N19.272 billion in 20,173 deals were traded this week by investors on the floor of the Exchange, in contrast to a total of 1.675 billion shares valued at N23.541 billion that exchanged hands last week in 21,732 deals.

The NSE All-Share Index and Market Capitalization depreciated by 0.69% to close the week at 38,382.39 and N20.082 trillion respectively.

Checks by InsideBusiness shows that Zenith Bank led the gainers in the banking sector during the week in review in terms of market capitalisation.

The tier-1 financial institution rose by 6.13 percent in value of its market capitalisation and share price, rising from N665.605 billion and N21.20 Kobo per share to N706.421 billion and N22.50 Kobo per share respectively.

The appreciation saw Zenith Bank gaining N40.815 billion and its outstanding shares remain at 31,396,493,786.

GTB followed with a N30.902 billion growth in the bank’s market share, climbing from N881.463 billion to N912.366 billion, representing 3.50 percent appreciation.

The Orange brand also recorded soared share price, moving from N29.95 Kobo per share to N31 per share.

Union Bank completed the biggest gainers’ table for the week when its share price and market capitalisation jumped by 4.95 percent, indicating a N7.280 billion surge.

The first generation bank saw its market capitalisation currently standing at N154.339 billion up from N147.059 billion, while the value of its share price rose from N5.05 Kobo per share to N5.30 Kobo per share.

Ecobank Transnational Corporation (ETI) dominated the losers for the week, losing N5.504 billion representing 5.8 percent to close at N94.500 billion in market capitalisation down from N88. 995 billion.

The share price which opened at N5.15 Kobo per share on Monday, March 15th fell to N4.85 Kobo per share on Friday Friday, March 19th.



GTBank reports full year PBT of N238.1billion

Guaranty Trust Bank plc, GTB, has released its audited financial results for the year ended December 31,2020 to the Nigerian and London Stock Exchanges.

READ ALSO: Equities market gains over N100bn as investors buy Zenith, GTBank, others

A review of the result shows improved performance across all key financial metrics in the face of theunprecedented challenges brought on by the COVID-19 pandemic, reflecting the quality of past decisionsand reaffirming its position as one of the best managed financial institutions in Africa.

The Group reported profit before tax of N238.1billion, representing a growth of 2.8percent over N231.7billion recorded in the corresponding year ended December 2019.

The Group’s Loan book (Net) grew by 10.7percent from N1.502trillion recorded as at December 2019 to N1.663trillion in December 2020, while Customers’ deposits increased by 38.6percent from N2.533trillion in December 2019 to N3.509trillion in December 2020.

Guaranty Trust Bank’s Balance sheet remained well structured, diversified and resilient with Total assetsand Shareholders’ Funds closing at N4.945trillion and N814.4billion respectively.

Full Impact CapitalAdequacy Ratio (CAR) remained very strong, closing at 21.9percent, while Asset quality was sustained as NPLratio and Cost of Risk (COR) closed at 6.4percent (Bank: 5.9percent) and 1.2percent (Bank: 1percent) in December 2020 from 6.5percent (Bank: 6.2percent) and 0.3percent (Bank: 0.2percent) in December 2019 respectively.

Commenting on the financial results, the Managing Director/CEO of Guaranty Trust Bank plc, SegunAgbaje, said; “2020 was arguably the most challenging year that the world has faced in decades. In suchunprecedented times, we sought to live out the full extent of our values; safeguarding lives and livelihoodsfor our people, our customers and across the communities where we operate. We were on solid footinggoing into 2020; the strength, scale and liquidity of our balance sheet, coupled with the quality of our pastdecisions and the efficacy of our digital-first customer-centric strategy gave us the resilience and flexibilityto navigate the economic shocks and market volatility that dominated the year.”

He further stated that; “Amidst the many challenges that persist, we remain ardent believers in Africa’sgrowth potential. Our world is increasingly digital, and we see it opening new and exciting opportunities forempowering people and uplifting our communities. With our commitment to deepening customerrelationships and intense focus on delivering innovative financial solutions, we enter 2021 well-positionedto lead this new world.”

Guaranty Trust Bank plc continues to post the best metrics in the Nigerian Banking industry in terms of allFinancial Ratios i.e. Post-Tax Return on Equity (ROAE) of 26.8percent, Post-Tax Return on Assets (ROAA) of 4.6percent, Full Impact Capital Adequacy Ratio (CAR) of 21.9percent and Cost to Income ratio of 38.2percent.


Nigerian Stocks

Guinness, other stocks drive NSE ASI high by 0.41%

Nigeria’s stocks market defied earlier negative predictions to close in the green zone on Tuesday, March 16 as investors showed interest in Guinness Nigeria Plc and other value counters.

READ ALSO: Inflation rate quickens to 48-month high…

Market watchers had predicted earlier bearish performance to filter into Tuesday trading session due to lack of positive news capable of lifting investors’ sentiment.

The National Bureau of Statistics (NBS) released the February inflation report with headline inflation jumping to a 4-year high at 17.33percent year-on-year (y/y) from 16.47 percent in January 2021.

At the Nigerian stock market, Guinness led the league of advancers after its share price moved up by N2.3 or 10 percent, from N23 to N25.3. Also, Vitafoam rallied from by 40kobo or 5.44percent, from N7.35 to N7.75; while Livestock Feeds made the top advancers after its share price increased by 7kobo or 3.83percent, from N1.83 to N1.9.

At the close of the trading session on Tuesday, March 16, the Nigerian Stock Exchange (NSE) All-Share Index (ASI) increased by 0.41 percent, from 38,561.84 points to 38,720.81 points while the value of listed stocks on the Nigerian Bourse increased by N83billion, from N20.175 trillion to N20.258trillion.

Despite the record positive close of equities trading on Custom Street, more investors chose to sell stocks like Wapic (-9.09percent), Africa Prudential (-8.26percent), Fidelity Bank (-6.69percent), ETI (-5.83percent), and GTBank (-4.84percent).


Nigerian Stocks

Stock market gains N128bn on renewed buy interest

Investors on the Nigerian Stock Exchange (NSE) are beginning to buy into recent dip as earlier envisaged. This move led to the record positive close on Tuesday March 10.

READ ALSO: Investment in Nigeria’s manufacturing sector down 76% on COVID-19

Investors showed remarkable interests in stocks like Champion Breweries (+8.91 percent ), Neimeth (+8.85percent) and Nahco (+6.64percent).

The Nigerian Stock Exchange (NSE) All-Share Index (ASI) and Market Capitalisation moved up from 38,686.85 points and N20.241trillion respectively on Tuesday to 38,931.25 points and N20.369trillion.

Stock market gains N128bn on renewed buy interest – Businessday NG

The NSE ASI increased by 0.63percent at the close of trading, while the value of listed stocks decreased by N128billion.

In 4,437 deals investors exchanged 368,216,369 units valued at N4.909billion. UBA, FBN Holdings and GTBank were actively traded stocks on the Bourse.

The market’s year-to-date (YtD) negative returns decreased to -3.33percent, while the record dip this month stood at -2.18percent.


Investors in Nigeria’s equities market became worse off in the trading week ended March 5 after booking about N245billion loss as funds moved out of equities due to impressive yields in the fixed income (FI) market.

Investors are now battling with the decision to either buy into the recent dip or to stay out of the market pending when there are major positives capable of reversing the negative trend.

Stock Exchange

Stocks shed N245bn: Investors go for attractive yields

Investors in Nigeria’s equities market became worse off in the trading week ended March 5 after booking about N245billion loss as funds moved out of equities due to impressive yields in the fixed income (FI) market.

READ ALSO: AfDB provides $400,000 grant for Nigeria’s SEC

Investors are now battling with the decision to either buy into the recent dip or to stay out of the market pending when there are major positives capable of reversing the negative trend.

The market disappointed despite significant increase in prices of crude oil –Nigeria’s major source of dollar revenue, coupled with the attractive dividend yields of a number of dividend-paying counters.

The Nigerian Stock Exchange (NSE) All-Share Index (ASI) and Market Capitalisation moved from week-open highs of 39,799.89 points and N20.823 trillion respectively to close the review week at 39,331.61 points and N20.578trillion.

The NSE ASI closed negative in four out of the five-day trading week, causing the benchmark performance indicator of the Bourse to decrease by 1.18percent week-on-week (WoW).

This negative was fueled mostly by remarkable losses in consumer goods, insurance and oil & gas stocks as evidenced in their sectoral indices.

NSE-30 Index which tracks the top 30 companies in terms of market capitalisation and liquidity decreased by 1.46percent in the review trading week.

Except NSE Industrial index which rose by 1.39percent, other sectoral indices closed in red –NSE Consumer goods index (-6.30percent), NSE Insurance index (-4.99percent), NSE Oil & Gas (-2.16percent), NSE Pension (-2.83percent), and NSE Banking (-1.94percent).

The stock market of Africa’s largest economy had bullish run in 2020 with a record-breaking return of +50percent amid unattractive yields in the fixed income space, placing it as world’s best.

Likewise, the market kicked off 2021 with similar trend, gaining 5.3percent in January, but since February (-5.6percent) it has maintained a southward direction. As at close of trading on Friday, the market has lost 2.33percent of its year-open value.


Stock Market

Nigerian stock market extends loss by 0.40%

Nigerian stock market extended negative trend for the third consecutive trading session following sell pressure on Nigerian Breweries, Dangote Sugar Refinery and tier-1 banks.

READ ALSO: Small businesses get N53b to create 1 million jobs

The All-Share Index on Thursday declined further by 157.39 points or 0.40 per cent to close at 39,394.67 from 39,522.06 posted on Wednesday.

Accordingly, the month-to-date and year-to-date losses increased to 1.1 per cent and 2.3 per cent, respectively.

In the same vein, the market capitalisation shed N83 billion to close at N20.595 trillion against N20.678 trillion recorded on Wednesday.

The market loss was driven by price depreciation in large and medium capitalised stocks amongst which are; Presco, Nigerian Enamelware, Nigerian Breweries, Julius Berger and Ardova.

Consequently, market sentiment was negative with 47 losers in contrast with 13 gainers.

Fidson Healthcare led the losers’ chart in percentage terms with 10 per cent to close at N4.41 per share.

Northern Nigeria Flour Mills followed with a decline of 9.97 per cent to close at N6.32 per share.

NEM Insurance and Nigerian Enamelware shed 9.95 per cent each to close at N1.72 and N19.90 per share, respectively.

NCR declined by 9.91 per cent to close at N3.09 per share.

Conversely, University Press dominated the gainers’ chart in percentage terms with 9.91 per cent to close at N1.22 per share.

Morison Industries followed with 9.09 per cent to close at 60k, while Chemical & Allied Products increased by 5.26 per cent to close at N20 per share.

Lafarge Africa grew by 3.59 per cent to close at N20.20, while livestock Feeds rose by 3.17 per cent to N2.28 per share.

Transactions in the shares of Universal Insurance topped the activity chart with 83.26 million shares valued at N16.65 million.

Zenith Bank followed with 38.65 million shares worth N983.25 million, while FBN Holdings traded 31.25 million shares valued at N216.72 million.

United Bank for Africa accounted for 26.78 million shares valued at N211.57 million while Access Bank transacted 21.59 million shares worth N168.09 million

Meanwhile, the total volume of traded increased by 101.8 per cent as investors bought and sold 493.17 million valued at N4.72 billion exchanged in 5,486 deals.

This was against a total of 244.34 million shares worth N4.13 billion traded in 4,714 deals on Wednesday. (NAN)