• Sunday, February 25, 2024
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Explainer: How to invest in your favourite Nigerian stocks in 2024

Last year, the Nigerian stock market recorded a 45.9 per cent return, the only asset class that outperformed inflation, and it is on track this year with a year-to-date of 9.70 per cent.

As an investor in Nigeria, to beat the double-digit inflation and rising cost of living, relying on a savings account with minimal yields won’t provide succour. A diversified investment portfolio is advisable, including stocks that can provide gains above the current inflation rate.

The Nigerian stock has become very accessible with the aid of technology, and the US and Nigerian stock markets have become accessible to Nigerians. You can buy shares at very affordable amounts on different regulated fintech platforms.

Olaolu Boboye, economist and fixed income strategist at CardinalStone, said the stock market performance has been generally exciting.

“You can hand-pick any stock, and in a few days, you are up and smiling because you’re in the green. So, that excitement is not just cited to the banks alone. It’s basically across the market,” he said.

On stocks to invest in, Boboye recommends tier 1 banks alongside others, “we love Access, GTB, Zenith, for other sectors, we like Transcorp, we also like Total and Seplat for the oil and gas sector,” he said.

Olumide Adesina, financial analyst at Quantum Economic, advised that when investing in stocks, one should start with funds they’re comfortable with and not buy many stocks to learn quickly.

He said the most liquid stocks are Nigerian bank stocks, “which means you can buy and sell them easily at a fair value.”

“Before hitting the buy button, looking into its finances and past performance is critical. Look at how much money the company makes, how much it spends, and how it compares to other companies in the same industry,” he said.

He said it is critical to look into the finances and past performance of the company stock you’re about to invest in, “look at how much money the company makes, how much it spends, and how it compares to other companies in the same industry.”

The following are some fundamental things you should know as a beginner in the stock market;

Apps to use

Buying stocks of your favourite companies in Nigeria, such as MTN, Airtel, and GTCo, is now easy.

Fintech apps like Afrinvestor 2.0, Trove, wealth.ng, and MeriTrade by Meristem Securities allow you to buy fractional shares from the Nigeria stock market at different charges. They are all regulated by the Securities Exchange Commission (SEC) and insured by the NDIC.

Stockbrokers

Stocks on the Nigeria exchange floor are available on the Fintech apps mentioned above. You can also buy them with the aid of a stockbroker.

A stockbroker is a financial professional who buys and sells stocks at the direction of clients.

To trade on the stock exchange you have to be a member of the exchange, though it is possible to buy shares from the companies directly, it is simpler to work with a stockbroker.

The Nigerian Stock Exchange frequently publishes a list of active and inactive stock brokers you can rely on.

Some stockbrokers in Nigeria include CardinalStone, Stanbic IBTC, APT Securities, Meristem, and several others.

Before choosing a brokerage firm, check their charges, the stocks they offer and their reputation.

Documentation requirements

To open a Central Securities Clearing System Limited account (CSCS) most stockbrokers require a means of identification (international passport, driver’s license, permanent voters card, etc), a passport photograph of yourself and signatories, and a proof of address(usually a recent utility bill).

Market timing

The Nigeria Stock Exchange opens every weekday from 9;30 am to 2:30 p.m except on public holidays.

In the US, the U.S. stock market’s regular trading hours, including the Nasdaq Stock Market (Nasdaq) and the New York Stock Exchange (NYSE), are 9:30 a.m. to 4 p.m., except on public holidays.

Account funding

You can fund your wallet by doing normal transfers from your naira account to your CSCS account and your fintech accounts. You do not need a dollar account to buy stocks.

Market fluctuates

As a beginner, knowing that the stock market does not always accrue gains is essential. The market fluctuates as prices increase. Stocks are long-term investment instruments that pay off later.

Financial advisor

An important investment rule is not to do things you do not understand. A financial advisor must guide you through the basics to build wealth in the stock market.