December 17, 2020 / 9:16 AM/ Nifemi Taiyese for Proshare WebTV / Header Image
The Nigerian Stock Exchange (NSE) in collaboration with Money Africa and United Capital Securities Limited held its Retail Investor Coverage Webinar on understanding stock market investing.
The CEO of the NSE. Mr. Oscar Onyema, OON, giving the opening remarks said the year 2020 would be remembered for its significant economic challenges for governments, businesses, and individuals.
The challenges of 2020 affected the means of livelihood for many individuals while many others saw their purchasing power eroded by inflationary trends, he said.
He alluded to the fact that viable investment options were few with interest rates on many securities falling considerably throughout the year.
Despite this, the stock market proved to be the proverbial silver lining for many investors having recorded some impressive feats during the year.
Speaking on the many feats of the NSE, the CEO said for the first time since its introduction four years ago the NSE market circuit breaker was activated when the NSE All Share Index (ASI) rose beyond its set threshold of 5%. The ASI posted its largest daily gain in more than five years on a day that also witnessed investor wealth growth by over 1 trillion naira. The NSE ASI has recorded a year-to-date return of 27.86%.
Furthermore over N877bn has been paid to investors in dividends this year, stating that analysts believe that this trend is set to continue for the foreseeable future.
The stock market has continued to attract significant demand from investors for different reasons including the need to diversify their investments portfolios, the need to take advantage of dividend earnings in a negative real interest rate environment, the desire to take on ownership state in different iconic companies or the search for higher returns on investment.
The CEO of the exchange emphasized that investing in the stock exchange continues to offer numerous benefits for investors. Speaking on the innovation in technology he said that these have made investing in the Nigerian stock market more convenient, secure, and accessible.
Investors want to know how to stay clear of investment pitfalls and at the same time stay ahead of inflation, all of which the webinar discussed.
Ms. Oluwatosin Olaseinde, CEO of Money Africa, in her presentation on the basics of stock market investing, started by defining a stock market as the ownership of a corporation that allows for individuals to own a portion of the company without taking possession.
She noted that people invest in the stock market because of dividends which she described as a return on investment, and capital appreciation which she said represents a rise in the share price.
Speaking on the misconception about the stock market, Money Africa's CEO highlighted the following:
She identified two key things that affect stocks, macro, and micro. The macro represents matters that are not within the corporation's power which affects everybody e.g., Coronavirus. While the micro represents problems that are unique to the company.
For individuals who want to start investing Olaseinde advised that they should have a discretionary income, identify the risk appetite, and adopt a strategy after gaining knowledge.
From research, into how the super-wealthy invest, it was discovered that they invested 33% of their income in local and global stocks.
She believed that Time, Knowledge, Consistency, and Balancing portfolio were critical elements in investing.
Giving the second presentation, on the Role of Stock Exchanges and Financial Intermediaries in the Stock Markets, Mr. Olufemi Shobanjo Head Broker, Dealer Regulations NSE giving an overview, mentioned the critical role of regulations in the stock market, as it provides an enabling framework.
The capital market's key participants and enabling framework according to him include the following; Broker-Dealers, Registrars, Investor/Participants, SEC (Apex Regulator), Ministry of Finance, Issuers, and Central Securities Clearing System.
Speaking on the role of financial intermediaries in the stock market, he said individuals can go through broker/dealers, fund managers, or asset managers.
He said the stock market plays critical roles in economies, as well as the Primary Market and Secondary Market.
Mr. Shobanjo said regulation of members of the Nigeria Stock Exchange and participants is done to ensure orderly, fair, and equitable dealings in listed securities.
Investor protection is one of the critical functions of any exchange, he said.
The webinar also featured an interview session with Mr. Wale Olusi Head, Research, United Capital Securities, who said the stock market is very volatile.
He called on the Nigerian Stock Exchange to sensitize those in secondary schools on training about the stock market from young ages.
According to him, his investment strategy was to identify companies that had remained profitable over a long period and are fundamentally strong stocks. He believed the stock market was a long-term investment platform.
Mr. Wale Olusi the Head of Investment Research, United Capital looking at the future said technology was threatening the jobs of brokers but on the flip side, it allowed for the trading of international stocks. He stressed that with technology there was no boundary as people could move in and out of markets with great speed and fluidity.