STOCK & CAPITAL MARKET
This section helps you understand financial literacy in Nigeria in a simple and practical way. Learn how money works, how to save, budget, and build wealth step by step. You can ask questions and get clear answers that help you make better financial decisions in your everyday life.
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How Does a Rate Cut Affect NGX Stock Prices in Nigeria?
Imagine the economy is like a big market, and the MPR (Monetary Policy Rate) is the price of borrowing money set by the Central Bank. When the Central Bank cuts rates, it means: “Banks, businesses, and people can borrow money more cheaply.” This can affect the NGX (stock market), the economy, and prRead more
Imagine the economy is like a big market, and the MPR (Monetary Policy Rate) is the price of borrowing money set by the Central Bank.
When the Central Bank cuts rates, it means:
“Banks, businesses, and people can borrow money more cheaply.”
This can affect the NGX (stock market), the economy, and prices in different ways.
1. Effect on NGX (Stock Market)
When interest rates fall:
Bank deposits and Treasury Bills may offer lower returns.
Some investors move money from savings and money market funds into stocks.
More money enters the stock market.
Example:
Before:
Treasury Bill = 22%
Stocks = Risky
After rate cut:
Treasury Bill = 16%
Some investors say:
“Let me buy MTN, Seplat, Access, or NIDF for better returns.”
This can help push stock prices up.
2. Effect on Businesses
Businesses can borrow at lower costs.
Example:
Before:
Company borrows at 25%
After:
Company borrows at 20%
Cheaper loans can help companies:
Expand operations
Buy equipment
Employ more workers
If companies perform better, their profits may improve, which can support their share prices.
3. Effect on the Economy
Lower rates can encourage:
More spending
More investing
More business activities
More jobs
Think of it as:
Rate cut = More money flowing around the economy.
4. Effect on Price Stability (Inflation)
This is where the Central Bank must be careful.
If too much money enters the economy:
More people buy goods
Demand increases
Prices may rise
Example:
If many people suddenly have money to buy rice, cars, or houses:
More buyers + Limited goods = Higher prices (inflation)
That is why the CBN tries to balance:
Economic growth
See lessStable prices
How do I buy and sell stocks on InvestNaija for short-term trading?
InvestNaija platform provides real-time access to Nigerian stocks on the NGX, so it supports buying and selling individual Nigerian stocks. But there is an important difference Investing: Buy MTN → hold for years → benefit from possible price growth and dividends. Short-term trading: Buy a stock → pRead more
InvestNaija platform provides real-time access to Nigerian stocks on the NGX, so it supports buying and selling individual Nigerian stocks.
But there is an important difference
Investing:
Buy MTN → hold for years → benefit from possible price growth and dividends.
Short-term trading:
Buy a stock → price moves up → sell relatively soon → try to capture the price difference.
InvestNaija itself describes trading as buying and selling assets over short periods, sometimes minutes or hours, with the aim of profiting from price movements.
The catch
Short-term trading is not guaranteed profit.
Example:
Buy at ₦100
Price falls to ₦95
You sell at ₦95
Loss = ₦5 per share, before costs.
And with less-liquid stocks, the price you see on the screen may not always be the price at which you can actually buy or sell your desired quantity. This is related to liquidity issue
See lessDoes NIDF’s ₦113.54 offer price mean the current market price could fall?
Yes, but the ₦113.54 offer price does NOT automatically mean NIDF’s market price will fall to ₦113.54. Here’s the simplest way to understand it. Think of NIDF like a shop There are two different prices: ₦147.70 = the price people were paying for NIDF units on the NGX. ₦113.54 = the special price atRead more
Yes,
but the ₦113.54 offer price does NOT automatically mean NIDF’s market price will fall to ₦113.54.
Here’s the simplest way to understand it.
Think of NIDF like a shop
There are two different prices:
₦147.70 = the price people were paying for NIDF units on the NGX.
₦113.54 = the special price at which NIDF is offering new units in this Series 12 offer.
NIDF itself says the ₦113.54 offer price is 23.13% below the ₦147.70 NGX closing price on September 22.
So:
₦113.54 is an offer/subscription price, not a prediction that NIDF will trade at ₦113.54.
So why would they sell at ₦113.54 when the market price is ₦147.70?
Because NIDF wants to raise up to ₦45 billion by issuing about 396.33 million new units.
It’s basically saying:
“We are raising new money. Investors who subscribe to this offer can enter at ₦113.54 per unit.”
The money raised is intended to support additional infrastructure investments.
But here’s the important part
There can be downward pressure on the market price because someone might think:
“Why should I buy NIDF for ₦147 when new investors are getting it for ₦113.54?”
That could make some existing or potential investors willing to sell or wait.
But it does NOT mean the price must fall to ₦113.54.
The actual NGX market price will still depend on buyers and sellers, demand, the fund’s performance, distributions, and how investors value the new units.
Interestingly, the latest market data I found shows NIDF at ₦162.40 on September 28, rather than falling toward ₦113.54.
See lessHow can beginners assess a company’s financial records before investing?
Oh, let's dive into the world of understanding a company's financial records before buying shares or ETFs. Imagine you're Mama Ngozi, who is considering investing in a vegetable farm in the village. Just like she would inspect the farm's past harvest records, checking if they made a profit or loss,Read more
Oh, let’s dive into the world of understanding a company’s financial records before buying shares or ETFs. Imagine you’re Mama Ngozi, who is considering investing in a vegetable farm in the village. Just like she would inspect the farm’s past harvest records, checking if they made a profit or loss, you too need to look into a company’s financial records before investing.
When you want to buy shares or ETFs (Exchange-Traded Funds) in a company, it’s essential to look at the company’s financial statements. These financial records are like a report card that tells you how well the company is performing financially. Here are a few things you can check:
1. Revenue: This is the money the company makes from selling its products or services. Like Mama Ngozi keeping track of how many baskets of tomatoes she sells, you want to see if the company is making a good amount of money.
2. Expenses: Just as Mama Ngozi needs to know how much she spends on buying seeds, fertilizers, and paying workers, you want to see how much the company is spending to make that revenue.
3. Profit: The profit is what’s left after subtracting the expenses from the revenue. Mama Ngozi wants to see a good profit from her farm, and you also want to see if the company is making a profit.
4. Debts: Mama Ngozi wouldn’t want to buy a farm with too many debts. Similarly, you want to check if the company has manageable debt levels.
5. Assets and Liabilities: Assets are what the company owns, like buildings and equipment, while liabilities are what the company owes. You want to make sure the company has more assets than liabilities.
To get this information, you can look at the company’s financial reports like the Income Statement, Balance Sheet, and Cash Flow Statement. These reports will give you a clear picture of the company’s financial health.
Remember, just like Mama Ngozi carefully inspects the tomatoes before buying, taking the time to understand a company’s financial records can help you make informed decisions when buying shares or ETFs. So, before you invest your hard-earned money, make sure to do your homework and understand the company’s financial story.
See lessHow do I access my CSCS and CHN while outside Nigeria?
Good afternoon my dear friend,It warms my heart to know you find value in the financial education shared. Your interest in understanding your Dangote subscription is commendable, and I'm here to help you navigate through this.Firstly, let's take a little journey to Mama Ngozi's famous tomato stall iRead more
Good afternoon my dear friend,
It warms my heart to know you find value in the financial education shared. Your interest in understanding your Dangote subscription is commendable, and I’m here to help you navigate through this.
Firstly, let’s take a little journey to Mama Ngozi’s famous tomato stall in the village. Imagine Mama Ngozi purchases a basket of fresh tomatoes from the market traders. She is given a receipt as proof of her purchase and ownership of those tomatoes. This is quite similar to your situation with Dangote, where you have invested and should have some form of proof of ownership.
In the financial world, this proof of ownership is like your own special basket where your investments are securely held. This is where the Central Securities Clearing System (CSCS) and the Central Securities Depository (CSD) come in. Think of them as the secure storehouse for all your investments, just like Mama Ngozi’s basket is a safe place for her tomatoes.
Now, about accessing your CSCS and CSD. Typically, you would receive an SMS on your phone linked to your BVN, containing a link to access your investments. However, being outside Nigeria might have caused a delay in receiving this SMS.
In this situation, the best step would be to reach out to your securities broker or the CSCS directly. They should be able to assist you in gaining access to your investments even while you are outside the country. They might require some verification steps, but with their guidance, you should be able to securely access your investment information.
Remember, just like Mama Ngozi guards her basket of tomatoes, it’s important to keep an eye on your investments to ensure they grow and work for you. Stay proactive and seek assistance when needed to safeguard your financial future.
Stay financially savvy, my friend!
Warm regards,
Ike (Mama Ngozi’s financial educator)
See lessCan I sell Dangote shares through the bank where I bought them?
As a Nigerian who wants to sell Dangote shares bought through a bank, you need to understand how the process works. Let's break it down in a way even Mama Ngozi would understand.Imagine you are Mama Ngozi, who sells tomatoes in the village. When you buy tomatoes in the market, you can sell them to yRead more
As a Nigerian who wants to sell Dangote shares bought through a bank, you need to understand how the process works. Let’s break it down in a way even Mama Ngozi would understand.
Imagine you are Mama Ngozi, who sells tomatoes in the village. When you buy tomatoes in the market, you can sell them to your customers to make a profit. In the same way, when you buy shares in a company like Dangote through a bank, you can sell those shares to make some money too.
Now, to sell your Dangote shares bought through a bank, you need to follow these simple steps:
1. Contact your bank or stockbroker: Just like how you talk to your supplier in the market, you need to reach out to your bank or stockbroker to let them know you want to sell your shares.
2. Provide necessary details: Your bank or stockbroker will ask for details like the number of shares you want to sell and at what price. This is like telling your customers how much each tomato costs.
3. Place a sell order: Your bank or stockbroker will help you place a sell order in the stock market. This is like putting your tomatoes on display in the market for customers to buy.
4. Wait for a buyer: Just like how you wait for customers to buy your tomatoes, you’ll need to wait for someone in the stock market to buy your shares.
5. Confirm the sale: Once your shares are sold, your bank will confirm the sale and credit your account with the proceeds. It’s like counting the money you made from selling your tomatoes.
Selling shares through a bank is like selling goods in the market, but instead of tomatoes, you are selling parts of a company. Remember, the process may involve fees and charges, so it’s good to ask your bank or stockbroker about any costs involved.
So, Mama Ngozi, just as you know how to sell tomatoes in the market, now you know how to sell Dangote shares if you buy them through a bank. It’s all about buying low, selling high, and making a profit. Happy selling!
See lessWhat Is Share Dilution and How Do New Share Issues Affect Existing Shareholders?
Let me explain in a simple manner using Pizza analogy Imagine a company’s ownership is a whole pizza cut into 4 large slices. If you own 1 slice, you own 25% of the pizza. If the company decides to create new share issues (e.g., re-slicing that same pizza into 8 smaller slices) to bring in new invesRead more
Let me explain in a simple manner using Pizza analogy
Imagine a company’s ownership is a whole pizza cut into 4 large slices. If you own 1 slice, you own 25% of the pizza. If the company decides to create new share issues (e.g., re-slicing that same pizza into 8 smaller slices) to bring in new investors, but you don’t buy any new slices, you still only own 1 slice.
Now, your 1 slice represents only 12.5% of the whole pizza instead of 25%. This reduction in your percentage of ownership is called ownership dilution.
2. How New Share Issues WorkWhen a business needs capital to fund growth, pay off debt, or make investments, it can issue brand-new stock (shares) and sell them to investors.
Before the issue: Total shares existing = #1,000,000. New shares issued: #250,000.
After the issue: Total shares existing = #1,250,000.
3. Impact of Ownership DilutionWhen new shares are created, existing shareholders experience several changes if they do not purchase additional shares: Reduced Voting Power: Your percentage share of the vote in major company decisions goes down.
Earnings Per Share (EPS) Dilution: Company profits are spread across a larger number of shares, which can temporarily reduce earnings per share. Dividend Share: Any potential per-share dividend payout gets split among more total shares.
Is Dilution Always Bad?
Not necessarily. If the money raised from issuing new shares allows the company to grow significantly, the total company “pie” grows much larger. Owning 10% of a #100 million company (#10 million) is better than owning 20% of a #10 million company (#2 million).
See lessWill My Dangote IPO Shares Be Credited to My Existing CSCS Account?
Yes, it is possible for a new CSCS account to be created, but it depends on whether you already had a CSCSlinked when you subscribed. For the Dangote Refinery IPO: If you already had a CSCS account and it was properly linked, your allotted shares should go into that existing account. If you didn't pRead more
Yes, it is possible for a new CSCS account to be created, but it depends on whether you already had a CSCSlinked when you subscribed.
For the Dangote Refinery IPO:
If you already had a CSCS account and it was properly linked, your allotted shares should go into that existing account.
If you didn’t provide an existing CSCS/CHN, a new CSCS account can be created as part of the IPO processing. InvestNaija confirms that applicants without an existing CSCS account can have one opened during processing.
CSCS itself says investors can technically have more than one CSCS account, but recommends maintaining one unique CHN.
In your particular case
Since you subscribed through SmartCash, rather than directly through InvestNaija, don’t assume that the shares will automatically appear in your existing InvestNaija CSCS account.
The important thing is which CSCS/CHN details were attached to your SmartCash IPO application.
If SmartCash didn’t ask you for your existing CSCS/CHN, there is a possibility that the IPO process creates a new account/record for you.
See lessShould I Receive an SMS After Buying Shares on the Nigerian Stock Market?
Ah, investing in the Nigerian stock market, a topic that many find intriguing! Now, let me break it down in a way our dear Mama Ngozi can relate to.Imagine you are at the market in Oshodi, trying to buy goods from different sellers. Each time you buy something, you get a receipt showing what you purRead more
Ah, investing in the Nigerian stock market, a topic that many find intriguing! Now, let me break it down in a way our dear Mama Ngozi can relate to.
Imagine you are at the market in Oshodi, trying to buy goods from different sellers. Each time you buy something, you get a receipt showing what you purchased, how much you paid, and the quantity, right? That’s similar to buying shares in a company through an investment app.
In this case, the text messages you received after buying shares are like those receipts. They confirm your purchase of shares in a company, showing you the name of the company, the number of shares you bought, and how much money you used for each purchase.
Now, if you bought 3 shares but only received 2 messages, the issue could be a glitch in the app or a delay in sending the message. It’s essential to keep track of all your investments, so if you have any concerns about missing messages or transactions, it’s wise to reach out to the customer support team of the app for clarification.
Remember, just like in the market, transparency and accuracy are crucial in investing. So, if you notice any discrepancies, it’s best to address them promptly to ensure your investment journey stays on the right track. Cheers to your investment adventures!
See lessWhy Haven’t I Received My CSCS Account After Subscribing to the Dangote IPO?
Oh yes! Let me explain this in a way that Mama Ngozi and everyone will get it.Imagine you went to the village market to buy some cassava, and the seller promised to deliver it to your house within two days. However, after several days, there's no cassava. Wouldn't that make you worried?So, in your cRead more
Oh yes! Let me explain this in a way that Mama Ngozi and everyone will get it.
Imagine you went to the village market to buy some cassava, and the seller promised to deliver it to your house within two days. However, after several days, there’s no cassava. Wouldn’t that make you worried?
So, in your case, you subscribed to the Dangote IPO through your Nigerian bank, expecting to receive your CSCS within 48 hours after subscription. But it’s been longer, and you haven’t received it. It’s natural to be concerned, just like waiting for that cassava to be delivered.
What should you do next? Well, just like in the village market scenario, where you might go back to ask the seller about the cassava, you should reach out to your bank or the relevant IPO support team. They can help track your CSCS and provide you with an update on its status.
It’s essential to stay proactive and follow up on your investment, ensuring that everything is in order. By reaching out, you can get the necessary information and address any concerns you may have regarding your CSCS.
Remember, just like in the village market, communication is key. By enquiring about your CSCS, you can stay informed and take the necessary steps to ensure your investment journey goes smoothly. So, don’t hesitate to reach out and get the clarity you need.
See less