Twitter Nigeria erupts with tales of woe about the Nigerian Stock Market

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A thread started by Nairametrics founder Ugo Obi-chukwu @ugodre erupted into a tale of bitter stories about experiences of Nigerians investing in the Nigerian Stock Market. The stock market which has returned 23% in the first half of this year and 29.7% last quarter alone in one of its greatest bull run ever. This prompted memories of 2007 prompting Ugo to start the thread.

Tales of woe

The tweets started pouring in after Ugo began a thread titled “Nigeria has had its fair share of worst IPO in the last 2 decades. What is your worst stock market investment ever?”

He followed up the tweet with another of his own pointing out some of  his worsts

Tweets started pouring in droves with Nigerian telling many tales of despair. One particular tweet that touched a nerve was that of person who explained how he and his wife lost about N100 million in margin loans taken at the time.

There were tales of some people who used their savings as students to invest in the stock market, only to see their savings disappear and any hope that the stock market is viable evaporate into thin air.

Japaul, Big Treat, Transcorp, Oando were all reoccuring stocks that have left bitter tastes in the mouth of Nigerians

The tweets are a stark reminder of how disappointed Nigerians are with the stock market which is also symbolic of why the All Share Index has failed to touch 50, 000 points which it last reached it 2007/2008. Investor apathy remains a huge challenge for the stock market with millions of Nigerians preferring to invest in ponzi schemes instead of investing in a stock market that they believe is rigged against them.

The Nigerian Stock Exchange under the leadership of Oscar Onyema has introduced several initiatives aimed at improving transparency but a lot still needs to be done. Market infractions are observed till today and the Nigerians continue to be fleeced of their money by insider dealing and connivance between officials of quoted companies and market operators.

The Stock Exchange also weighed in on the tweets, albeit late night when most Nigerians had gone to bed, explaining what they have done to restore investor confidence.

It is unlikely that these set of tweets will pacify millions of Nigerians who have sworn never to invest in the Nigerian Stock Market as most do not believe that things have changed.

As things stands, the Nigerian stock market may have just 10 years left before it goes into oblivion. Nigerians have basically found other means of investing their money and not feel cheated or fleeced by market operators and company executives. Nigerians are investing more in cryptocurrencies and looking overseas for equities market and forex trading. As technology continues to make the world smaller, billions of Naira will pour into investing beyond Nigeria and in markets that are more transparent and promise more returns.

An analysts and private equity investor also weighed in explaining that some of the tweets explained that for most private held companies in Nigeria, the stock market is viewed as a place where you can dump lemons. According to him, aside from a few companies most of the well run companies in Nigeria stay out of the stock market. “The incentives are not just there for any serious company to come and invest.”

Nigeria’s equity market is basically in a lull with no more than 5 IPOs in almost 5 years. Right issues and public offers are paltry with only majority shareholders of the company scooping up most of the rights. With a market cap of just N11 trillion with the likes of Dangote Cement, the FUGAZ making up over 35% of market cap, the stock market is as shallow as it gets. It is not just an attractive proposition for serious companies.

The leadership of the Nigerian stocks exchange has a lot of work on its hands if it is to win back some confidence in the Nigerian investor. For now, most Nigerians are reeling and it will take more than big talk to win their confidence back.

4 COMMENTS

  1. Nice Thread. As a financial expert and capital market analyst, you failed to educate your readers about the key risks inherent in the stock market. You failed to tell them that there’s no guarantee they’ll make money on a stock at any given point in time. Although a number of things can help them assess a stock, no one can predict exactly how a stock will perform in the future. There’s no guarantee prices will go up or that the company will pay dividends. Or that a company will even stay in business.

    Stock prices can change often and for many reasons. You have to be comfortable with the risk that you might lose all of your money when you buy and sell stocks, especially if you’re not planning to invest for the long term. If you use leverage to invest in stocks, like buying on margin or short selling, you could lose more than you invest.

    Use your platform to tell people that there are always ups and downs in the stock market. You don’t just invest and make gains

  2. Hugo, God bless you for the tread. The government will need to make scape goats out of the peeps that defrauded us in the last (2007/2008) run. The people that rigged the market and insider traders. When we see that some of us may be willing to come back. An example are issuing houses or who ever fixes the price of a stock at 11naira knowing that the fair value of such stock is about 3 naira. Transcorp readily comes to mind here

  3. me think nobody is wrong in this by obi or artilola.THE MAJOR PROBLEM IN NIGERIAN ECONOMY, IS THAT THERE IS NO GOOD BAD OR UGLY IN NIGERIAN ECONOMYwhen the recession happen,there is no leeway to give investors hope,to do some sort of enterprenuering risk. To heat the economy badly, Now the Nigerian stock market is still dry,it have few listed companie any inexperienced investors know the stock market is empty,and many lost their money,which I think is not entirely the fault inexperienced investors,as it will happen again in two yrs,unless the management pushes for more listed companies in the Nigerian stock market.
    As you knows the money market ins still in infancy,bank interest is still in double digit,the Nigerian stock market have gain 2 trillion this year,close to the level more or less in2014/15 but it is very cautious.we all want to be happy,the stock market is the only way to make money or not easily but we can all as nigerian help each others,by appling some pressures,precisely in some area with or without govt initiatives,to broaden and deepen the Nigerian stock market,even you nairametric can help your country men and women make some killing in the stock market “why are your research team are obessed with black market exchange rate instead of the stock market”.So also do registered stockbrokers,they can help to get more listed companies on the Nigerian stock market,they were lazy and guilty of complency,they can do their research and persuade some companies executive that makes money,listed on the nse,so do amcon float some companies listed on the nse,and govt can recover their money,and those companies will have some income.there is a chance they will lower product or service cost and inflation can come down,the nse can do massive marketing and drive to get more companies listed.all these are easy.,if there is will..it is 80 % in the court of the govt.the call is the govt

  4. Buying stocks anywhere in the world comes with risk. I can’t believe someone borrowed money to buy stocks,it shows that many retail investors lack knowledge and understanding of the workings of the Stock market. also the NSE has a lot of work to do to renew confidence in the market. there is too much fleecing being carried out by market operators and company executives.

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