Structure of Nigeria Capital Markets
Accessing the Nigerian capital markets:
The Nigerian Capital Market is the most vibrant in Africa after that of South Africa.
The Nigerian Stock Exchange which was founded in 1960. It is 2nd most active exchange in Africa after the Johannesburg Exchange with 197securities listed on the daily official list of the Exchange.
Companies have their Shares listed by the Stock Exchange to be bought and sold daily by the public.
The market Capitalisation (The total value of each store multiplied by the number of the stores of each company taken together) is about N3.7Trillion which at current exchange rates converts to about 29 Billion US Dollars.
The returns (The Profit) in real terms in the Nigerian Capital Markets have been the highest Worldwide for many years running.
The Nigerian capital Market is generous not only in the dividend yields (The % of the cost of the Shares to the dividend paid annually) but also in terms of price appreciation of stocks.
This year alone, the Nigerian Capital market has grown by more than 50%, although most of the growth can be linked to the pressure on the Capital Markets by the new Pension Fund Administrators who are required by the new Pension Reform Act 2004 to invest a good portion of the Pension Funds they manage in the Nigerian Capital Market.
The most appreciating Stocks this year (Those Stocks that achieved more than 100% appreciation from 1st January 2006 – 30th November 2006 are as follows:-1 Incar Motors 700%
2 Union Dicon Salt 444%
3 BenueCement 431%
4 Cement CNN 332%
5 Access Bank 300%
6 CAP Plc 250%
7 WAPCO 243%
8 R.T. Briscoe 194%
9 Poly Products 159%
10 Flour Mills 152%
11 Oceanic Bank 148%
12 Evans Medical 140%
13 Nampak Nigeria 138%
14 Julius Berger 131%
15 Vono Products 130%
16 University Press 121%
17 May and Baker 120%
18 NCR 116%
19 Glaxosmithline 107%
20 Okomu Oil 103%
Nine (9) other Securities appreciated between 90% and 99% therefore, nearly 15% of Stocks listed on the Nigerian Stocks Exchange have appreciated between 90% and 100% in the last 11 months!!
How to Trade…
Any new Capital Market investor has to contact Stock Brokers who will give them a number of forms to complete.
A Stock Broker is required by Money Laundering Regulations in Nigeria to know his Client and so you will be required to complete a personal information form. You will also be required to complete a form R005 which is lodged at the Central Securities Clearing System
The role of the Central Securities Clearing System is to act as a clearing house for transactions on the Nigerian Stock Exchange. Stock broking firms are credited from funds earlier lodged by the buying house in its account in one of the Settlement banks registered for that purpose by the CSCS. These banks include Sterling Bank Plc, formerly Magnum Trust bank Plc, UBA formerly Standard Trust Bank and Guaranty Trust Bank Plc
After this, as account is opened for the customer by the Stock-broking firm after which the investor funds the account.
Some Stockbrokers will execute any “bid” order for no matter how small, but some other would rather deal with bigger customers.
You can invest any amount of money in the Nigerian Capital Market, Even as low as N1,000. You can decide to control what your Stockbroker buys or sells on your behalf (known as the execution only) or you may allow the Stockbroker to buy or sell on your behalf for maximum returns, in which case the Stockbroker will be allowed to use his discretion.
Once you own shares on the Nigerian Stock Exchange, you will be automatically subscribed to the CSCS Trade Alert . The CSCS Trade Alert enables the investor to receive a text by your phone if any Shares being held in your name are being traded. This may be useful also for those international Shareholders whose phones can receive texts from Nigeria or email.
Customers who have left their investments in care of their stockbrokers can upon receipt of the text message from the CSCS enquire about the price the stock is to be sold for and as to what shares the stock-broker intends to buy in replacement.
Investors can mandate dividends to be paid directly into any bank account held in their names in Nigeria.
Can Foreigners invest in the Stock market?
Yes Foreigners can invest in the Nigerian capital Market and will have unimpeded access and can repatriate their dividends without hindrance.
The Foreign Exchange Monitoring and Miscellaneous Provisions Act abolished the regime of exchange controls, especially for capital importation and repatriation. Under the new Act, foreign investors can know bring in investment capital by wire transfer through bankers, which will issue the necessary certificate of capital importation, without seeking any approval from Government. Foreign investors may also repatriate dividends/profit arising from their investment in Nigeria.
The Nigerian Capital Market is the most vibrant in Africa after that of South Africa.
The Nigerian Stock Exchange which was founded in 1960. It is 2nd most active exchange in Africa after the Johannesburg Exchange with 197securities listed on the daily official list of the Exchange.
Companies have their Shares listed by the Stock Exchange to be bought and sold daily by the public.
The market Capitalisation (The total value of each store multiplied by the number of the stores of each company taken together) is about N3.7Trillion which at current exchange rates converts to about 29 Billion US Dollars.
The returns (The Profit) in real terms in the Nigerian Capital Markets have been the highest Worldwide for many years running.
The Nigerian capital Market is generous not only in the dividend yields (The % of the cost of the Shares to the dividend paid annually) but also in terms of price appreciation of stocks.
This year alone, the Nigerian Capital market has grown by more than 50%, although most of the growth can be linked to the pressure on the Capital Markets by the new Pension Fund Administrators who are required by the new Pension Reform Act 2004 to invest a good portion of the Pension Funds they manage in the Nigerian Capital Market.
The most appreciating Stocks this year (Those Stocks that achieved more than 100% appreciation from 1st January 2006 – 30th November 2006 are as follows:-1 Incar Motors 700%
2 Union Dicon Salt 444%
3 BenueCement 431%
4 Cement CNN 332%
5 Access Bank 300%
6 CAP Plc 250%
7 WAPCO 243%
8 R.T. Briscoe 194%
9 Poly Products 159%
10 Flour Mills 152%
11 Oceanic Bank 148%
12 Evans Medical 140%
13 Nampak Nigeria 138%
14 Julius Berger 131%
15 Vono Products 130%
16 University Press 121%
17 May and Baker 120%
18 NCR 116%
19 Glaxosmithline 107%
20 Okomu Oil 103%
Nine (9) other Securities appreciated between 90% and 99% therefore, nearly 15% of Stocks listed on the Nigerian Stocks Exchange have appreciated between 90% and 100% in the last 11 months!!
How to Trade…
Any new Capital Market investor has to contact Stock Brokers who will give them a number of forms to complete.
A Stock Broker is required by Money Laundering Regulations in Nigeria to know his Client and so you will be required to complete a personal information form. You will also be required to complete a form R005 which is lodged at the Central Securities Clearing System
The role of the Central Securities Clearing System is to act as a clearing house for transactions on the Nigerian Stock Exchange. Stock broking firms are credited from funds earlier lodged by the buying house in its account in one of the Settlement banks registered for that purpose by the CSCS. These banks include Sterling Bank Plc, formerly Magnum Trust bank Plc, UBA formerly Standard Trust Bank and Guaranty Trust Bank Plc
After this, as account is opened for the customer by the Stock-broking firm after which the investor funds the account.
Some Stockbrokers will execute any “bid” order for no matter how small, but some other would rather deal with bigger customers.
You can invest any amount of money in the Nigerian Capital Market, Even as low as N1,000. You can decide to control what your Stockbroker buys or sells on your behalf (known as the execution only) or you may allow the Stockbroker to buy or sell on your behalf for maximum returns, in which case the Stockbroker will be allowed to use his discretion.
Once you own shares on the Nigerian Stock Exchange, you will be automatically subscribed to the CSCS Trade Alert . The CSCS Trade Alert enables the investor to receive a text by your phone if any Shares being held in your name are being traded. This may be useful also for those international Shareholders whose phones can receive texts from Nigeria or email.
Customers who have left their investments in care of their stockbrokers can upon receipt of the text message from the CSCS enquire about the price the stock is to be sold for and as to what shares the stock-broker intends to buy in replacement.
Investors can mandate dividends to be paid directly into any bank account held in their names in Nigeria.
Can Foreigners invest in the Stock market?
Yes Foreigners can invest in the Nigerian capital Market and will have unimpeded access and can repatriate their dividends without hindrance.
The Foreign Exchange Monitoring and Miscellaneous Provisions Act abolished the regime of exchange controls, especially for capital importation and repatriation. Under the new Act, foreign investors can know bring in investment capital by wire transfer through bankers, which will issue the necessary certificate of capital importation, without seeking any approval from Government. Foreign investors may also repatriate dividends/profit arising from their investment in Nigeria.
posted by FREDRICK B. A. at
10:12 AM
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