THE NIGERIAN STOCK EXCHANGE MARKET
THE NIGERIAN STOCK EXCHANGE MARKET
A stock exchange market is a regulated and organized financial market; where securities such as bonds, shares, notes, etc. are traded at a certain price governed by the forces of demand and supply. It is a primary market that allows government, corporate, and incorporated bodies to raise capital from the public, as well as a secondary market where investors can sell out their shares or securities to other interested investors for cash.
The Nigerian stock exchange (NSE) is one of the biggest stock markets in Africa, listing top companies from different industries in Nigeria. The Nigerian stock exchange was founded on September 15, 1960, as the Lagos stock exchange with only seven subscribers to the exchange’s memorandum of association.
It later became known as the Nigerian Stock Exchange in December 1977 with branches established in other commercial cities of the country. The NSE is licensed under the Investment and Securities Act and regulated by the Securities and Exchange Commission of Nigeria.
As a registered company limited by guarantee, the Nigeria stock exchange began its operation officially on August 25, 1961, with 19 securities listed for trading. It has been operating an Automated Trading System (ATS) since April 1999, with dealers trading through a computer network. In 2013, the NSE launched an electronic trading platform for retail and institutional segments called X-Gen. trading in the Nigerian Stock Exchange is carried out every Monday to Friday between the hours of 9:30 am to 2:30 pm.
Operation in the Nigerian stock exchange is open to both local and foreign investors; Regulations preventing the free flow of foreign capital into the Nigerian Stock Exchange have been abolished and foreign brokers are now listed as dealers on the Nigerian Stock Exchange market.
Companies Listed In the Nigerian Stock Exchange Market
The Nigerian Stock Exchange Market is the third-largest stock exchange in Africa regarding market capitalization, amounting to about 8.5 trillion Nigerian Nairas. Currently, there are close to 180 companies listed on the NSE with the data on their performance published daily, weekly, monthly, quarterly, and even annually on the NSE website, national newspapers, and other recognized platforms. Historical data of these companies can be retrieved from the NSE website for purpose of analysis, forecast, and decision making by investors or prospectus investors.
The Nigerian Stock Exchange list companies in three categories namely, the premium board, the mainboard and the Alternative Securities Market (ASeM). Currently, it has about eight domestic companies on the premium board, 144 listed companies on the mainboard, and four companies on the Alternative Securities Market (ASeM) board
The premium board is the elite companies that have met stringent corporate governance, liquidity, and capitalization criteria; The main board comprises larger companies with high profitability or market capitalization while the Alternative Securities Market (ASeM) is the smaller group companies with high-growth potentials.
The value-Weighted AIS (all-share Index), which was formulated in January 1984 with a base value of 100, tracks the general market movement of all equities listed on the stock exchange while the NGX30 and NGX50 track respectively, the top 30 and 50 companies in terms of liquidity and market capitalization.
Additionally, the NSE also uses five sector indices which include; NSE Banking Index, NSE consumer Index, NSE Industrial Index, NSE Insurance Index, and NSE Oil & Gas Index. These indices are weighted by adjusted market capitalization, which is calculated as the number of a company’s listed securities, the closing price, and the capping factor.
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THE NIGERIAN STOCK EXCHANGE MARKET
Companies quoted on the Nigerian Stock Exchange include:
BASIC MATERIAL INDUSTRY
Companies listed in this sector include;
- African Paints (Nigeria) | AFRPAINTS
- Aluminium Extrusion Industries | ALEX
- C. Gases Nigeria | BOCGAS
- Berger Paints | BERGER
- CAP | CAP
- First Aluminium Nigeria | FIRSTALUM
- Meyer | DNMEYER
- Multiverse | MULTIVERSE
- Paints & Coatings Manufactures | PAINTCOM
- Portl& Paints & Products Nigeria | PORTPAINT
- Premier Paints | PREMPAINTS
- Thomas Wyatt Nigeria | THOMASWY
- 7-Up Bottling Company | 7UP
CONSUMER GOODS INDUSTRY
Companies in this category include;
- Cadbury Nigeria | CADBURY
- Champion Breweries | CHAMPION
- Dangote Flour Mills | DANGFLOUR
- Dangote Sugar Refinery | DANGSUGAR
- Ellah Lakes | ELLAHLAKES
- Flour Mills Of Nigeria | FLOURMILL
- FTN Cocoa Processors | FTNCOCOA
- Golden Guinea Breweries | GOLDBREW
- Guinness Nigeria | GUINNESS, etc.
CONSUMER SERVICES INDUSTRY
Companies listed here include;
- Afromedia | AFROMEDIA
- Capital Hotel | CAPHOTEL
- Daar Communications | DAARCOMM
- DN Tyre & Rubber | DUNLOP
- Ikeja Hotel | IKEJAHOTEL
- Learn Africa | LEARNAFRCA
- Med-View Airline | MEDVIEWAIR
- R T Briscoe | RTBRISCOE
- Secure Electronic Technology | NSLTECH
- Tantalizers | TANTALIZER, etc.
FINANCIALS INDUSTRY
The financial industry has the highest number of listed companies on the NSE. They include;
- Abbey Mortgage Bank | ABBEYBDS
- Access Bank |ACCESS
- African Alliance Insurance | AFRINSURE
- Aiico Insurance | AIICO
- Arbico | ARBICO
- Aso Savings & Loans | ASOSAVINGS
- Axamansard Insurance | MANSARD
- Consolidated Hallmark Insurance | HMARKINS
- Continental Reinsurance | CONTINSURE
- Cornerstone Insurance | CORNERST
- Custodian & Allied | CUSTODYINS
- Deap Capital Management & Trust | DEAPCAP
- Diamond Bank | DIAMONDBNK
- Ecobank | ETI, etc.
Other industries include; health care, Manufacturing, Oil & gas, and technology.
How to Trade in the Nigerian Stock Exchange
To start trading on the Nigerian Stock Exchange, you have to complete some simple procedures that will guarantee your
- Open a stock trading account with a stockbroker
There are different brokers dealing in the Nigerian Stock Exchange offering a different levels of technical support and advice to their clients. When choosing a broker, you have to make such that the broker is a licensed dealer in the NSE; you have to know how high or low their fees are and if they are trustworthy to carry out transactions on your behalf. The stock trading account takes about 48 hours, two days to be completed. It requires you to fill out the same basic information and provide some essential documents.
- Complete the Central Securities Clearing System (CSCS) form with your broker
Apart from opening an account with the brokerage, you also need to own a Central Securities Clearing System account. Your broker will provide the CSCS account opening form, this form needs to be filled submitted along with the supporting identity proof documents. The CSCS is a platform that keeps the record of each security in Nigeria.
- Fund your stock Broker Account
Once you complete your CSCS account opening, a Clearing House Number (CHN) will be issued; this number is unique for each registered portfolio. You can now start your investment journey by funding your broker account to place orders through your broker.
Conclusion
The Nigerian stock exchange market is a medium that connects buyers and sellers who are ready to transact the same stock at an agreed price. The NSE enables investors and businesses to have access to reliable sources of capital as well as a secured saving system structure. The broker simplifies the stock trading processes. They act as middlemen who earn commission from their activities; carrying out trade transactions on behalf of their clients.
It is worthy of note that the stock exchange market is fluctuating in nature and that transactions are carried out based on the broker’s speculation rather than on known facts. And as such, it is possible for an investor to lose a large amount of money in the process. If you are not ready to risk your resources do not bother going into stock trading. However, an investor who studies and understands the market signals can go home smiling with the profit made from stock trading. As an investor, you have to monitor and analyze market signals very frequently. Still, there are brokers who offer these services; providing you with market signals and their interpretation for your decision-making needs.
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