Last updated on August 26th, 2022 at 03:15 pm
Hundreds of people who want to invest in stocks either don’t know how to get started or don’t have enough information about stocks in Nigeria which they can buy, we’ll guide you on how you can the technological advancement in stocks trading.
The fact that you can make money from trading stocks also comes with risks. If the company you bought its stocks liquidate, you may lose your investment. Or when the value of the share you bought depreciate, your investment will also be affected. Trade with caution. And talk to an investment adviser or professional stock dealer.
The price of stocks at NGX on this guide will be updated by the close of trading.
What are stocks?
Stocks are a fraction of the company’s shares you buy so as to be one of the shareholders. Stocks are shares of ownership of a company or incorporation.
Stocks are also called “equities”, they are used interchangeably. When you hear people say they trade stocks, they buy the dip or when the price is favourable and sell when they appreciate in value in the NGX.
Stocks can be likened to a group of 10 people who pool resources together to buy a cow during the festive period, and each gets a portion of the cow meat according to the size of their contribution.
That’s the most localised way to understand stocks or shares. In fact, you would hear such people in the local areas say, “where is my share”
How trading in stocks works
The MTN Public Offer that ended on December 14, 2021 was NGN169 per unit. What this means is that you can decide to sell the units of shares you bought when the telecom concludes the allotment.
If by that the time you want to sell your share, its value rises to (say) NGN250, that’s a gain of NGN81 on each of your units. If you bought 5,000units, that is 5000XNGN81 translates to a gain of NGN405,000 for the owner (excluding charges).
That’s how investors generate revenue from stocks trading in Nigeria.
You have to monitor activities in the NGX to take decision or talk to your stockbroker and be conversant with key decision and company’s policy that trigger appreciation or depreciation of its stocks,
Why should I buy stocks?
I was going through the Facebook Page of MTN Nigeria, where investors asked a barrage of questions. One interesting question that caught my attention is: Why do Investors buy stocks?
- with the goal of making profits when the price of stocks rise
- earnings through dividend when the company declares profits and pay a dividend to its shareholders.
- ability to influence the company’s decision, depending on the category of shareholder: common or preferred?
If the above are the goals of investors buying stocks…
Why do companies sell stocks?
- For expansion
- To raise capital for new products as we’ve seen in the case of MTN which plans to diversify into financial services
- Some companies sell equities to pay off debt
- To explore new markets
How To Buy Stocks Online in Nigeria
Stocks are traded at Nigerian Exchange Limited (NGX) by stockbrokers that are licenced by the Security and Exchange Commission (SEC). This means you must register under a stockbroker most of which now have online apps to trade stocks.
As such, you can 1) buy securities directly from the primary market when there are new offerings e.g mtn offer 2) by trading in existing listed securities through secondary market platform.
Follow the guide below to buy equities online in Nigeria:
1) Appoint a stockbroker or securities dealer who is a registered Trading License Holder of NGX
2) Your stockbroker opens a trading account for you.
Note: You must provide the required documents by NGX to your dealer or stockbroker as part of the regulatory Know-Your-Client (KYC)
3) Your stockbroker creates a CSCS number and Clearing House Number (CHN) for you.
4) So once you have funded your account with your dealer, you buy and hold and sell when the stock rises.
Note: You need CSCS account to trade because your assets will be domiciled in the Central Securities Clearing System Plc (CSCS).
CSCS is the licensed Central Depository, Clearing and Settlement of transactions in the Nigerian capital market.
The beauty of trading stocks has even been simplified by the recent release of a PrimarOffer App courtesy of the Nigeria Exchange Limited (NGX) through which Nigerians who wish to subscribe to MTN Public Offer (PO), were encouraged to do so.
On Tuesday, December 14, 2021 (1700), the MTN PO closed. And as of December 15, 2021 (13:56), MTN stock appreciated by 0.11% trading at NGN187 at NGX. It closed at NGN197.00 on January 04, 2022.
Although, nairametrics reported that shareholder groups of MTN Nigeria are calling on the telecom firm and SEC to extend the Public Offer so as to give more Nigerians the opportunity to buy the share. But while you await the decision of the board of directors of MTN Nigeria, there are at least 50 stocks you can invest in.
Top Performing Stocks in Nigeria You Can Buy
Those who subscribed to MTN PO took a wise decision considering the track record of the telecommunication firm since it was listed on NGX. If you missed out on the MTN share, the opportunity to invest in stocks is open every day. Below is the list of shares (stocks) you can buy in Nigeria
|Company||Current Market Value of Stocks|
|Dangote Cement (DANGCEM)||NGN250.00|
|UPDC Real Estate||NGN1.18|
|Fidelity Bank (FIDELITYB)||NGN2.51|
|FBN Holdings (FBNH)||NGN11.85|
It’s better to choose an online stockbroker most especially firms with stock trading apps; Check the antecedent of a company before jumping on its stocks.
You can take the opportunity of the available stocks in Nigeria on the NGX to build your portfolio
- Editor (September 30, 2021). “How to buy stocks: A beginners guide”. The Guardian Capital Market. Retrieved December 14, 2021
- Nigerian Exchange NGX. “Becoming An Investor”. The Nigerian Exchange Limited. Retrieved December 14, 2021
- SEC Nigeria. “What We Do”. Security and Exchange Commission. Retrieved December 14, 2021