How You Can Invest In Nigeria's Capital Market

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The Nigerian Bourse (NSE) is one of the best in connecting African investors from around the world.

Investors can acquire securities expressly from primary markets when new offerings are placed by issuers and trading in listed securities through the secondary market.

If you’re willing to invest, you can appoint a securities dealer or stock broker and make sure he/she is a registered dealing member of the NSE to help facilitate trading. The only licenced central depository, clearing and settlement of transactions is the CSCS (Central Securities Clearing System Plc).

Have in mind that the capital market is an investment platform, where you allow your money work for you.

Before you open a trading account, you must submit a dealer’s document that meets the regulatory requirements. Basically, you must know your clients. Regardless of your location, you can opt to hold asset domiciled with CSCS directly under a licensed domestic custodian appointed by them.

After finding a stockbroker to open an account, the funding of your brokerage account is next and then submit your first trade order as soon as you decide on the type of stock you’re buying.

Before selecting a broker to represent you and facilitate trading and account opening, confirm the broker’s status with both the NSE and SEC to avoid stories that hurt. The bourse also recommends that potential investors connect with a broking firm and determine the nature of their services. The bottom line is that it must meet your specific needs. Note also that stockbrokers and custodians are obligated to manage their accounts and keep their records safe and secure.

Most importantly, avoid the guesswork and meet with a licensed stockbroker, investment advisor or financial advisor right away. In order not to lose money in the stock market, it is important to diversify your portfolio. This means buying stock in several companies and industries rather than putting all your eggs in one basket. Don’t forget as well to get the necessary knowledge and information about a stock before buying it.

Understanding the volatility of stocks, especially those prone to shocks due to oil price and insecurity can save you a lot of misfortune.

With banks currently experiencing a stiffening monetary policy by the Central Bank of Nigeria (CBN), and of course, closing their loan books, checking out for deposit money banks with increased investment securities will provide investors with higher dividends.

There are 3 banks that have the potential for high dividends; Zenith, UBA and GTB. With the recent takeover of Diamond bank, Access bank has a huge potential for investors to return on investment in a couple of years to come. So also are insurance companies with an above-average return on equity and an accumulated ratio of less than 100 per cent.

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