STOCK & CAPITAL MARKET

Have you ever been to the market, let’s say the busy Oshodi Market in Lagos, where you notice some shops are closing up and some traders are packing their goods to leave? It’s a sign that the market day is ending, right? Well, when a company is about to be delisted on the Nigerian Exchange Group (NGX), it’s kind of like that.

Delisting happens when a company is no longer meeting the requirements set by the NGX. It could be because the company is struggling financially, not submitting necessary reports, or even deciding to go private. Just like the traders leaving the market, the company may be leaving the stock exchange.

Now, if you have shares in a company that’s about to be delisted, don’t panic. You still have options. You can choose to hold onto your shares even after delisting, hoping the company turns things around. Alternatively, you might be able to sell your shares on the over-the-counter market. This is a way to trade shares privately after they are no longer on the official exchange.

Remember, investing in the stock market comes with risks, including the possibility of a company being delisted. It’s essential to stay informed about your investments and seek advice from a qualified financial advisor when needed. Don’t forget, just like in the market, change is constant, and being prepared for it is key.

In Nigeria, companies typically pay dividends to their shareholders one to two times a year. These dividend payments are usually declared during annual general meetings (AGMs) and/or interim meetings. The frequency of dividend payments can vary depending on the company’s financial performance, dividend policy, and industry norms.

During the AGM, which is an annual gathering of a company’s shareholders, the board of directors announces the company’s financial results for the year. If the company has made profits and decides to distribute a portion of those profits to shareholders, it declares dividends. These dividends are then paid out to shareholders.

Some companies in Nigeria may also issue interim dividends during the year. Interim dividends are payments made before the final annual dividends are declared. Companies that have a history of stable profits and cash flow may choose to distribute interim dividends to reward shareholders while waiting for the final dividend declaration.

It’s important to note that the decision to pay dividends and the frequency of dividend payments are determined by the company’s management and board of directors. Shareholders receive dividends based on the number of shares they hold in the company.

If a company decides not to pay dividends, it may reinvest the profits back into the business for growth or retain the earnings for future use. Understanding how dividends work is crucial for investors looking to generate passive income from their investments in Nigerian companies.

Stocks represent ownership in a company. When you buy a stock, you’re essentially buying a small piece of that company. This ownership entitles you to a share in the company’s profits through dividends (if the company pays them) and potentially through the increase in the stock price over time.

Let’s break it down further using a familiar Nigerian example. Imagine you want to start a provision store but you need help with the initial capital. You decide to seek investors. Each investor who gives you money now owns a part of your store. In return, they hope that your store will do well and the value of their ownership (stock) in your store will increase over time.

In real life, companies issue stocks to raise funds for various reasons such as expansion, research, or paying off debt. Investors buy these stocks through the Nigerian Exchange Group (NGX) with the hope that the company will grow and their investment will also grow in value over time.

As a stock investor, you can benefit in the following ways:
1. Capital appreciation: If the value of the company increases, the value of your stock also increases.
2. Dividends: Some companies pay out a portion of their profits to shareholders as dividends.
3. Voting rights: Depending on the type of stock you own, you may have a say in the company’s decisions during shareholder meetings.

However, investing in stocks also comes with risks:
1. Volatility: Stock prices can be unpredictable and can fluctuate daily.
2. Market Risk: External factors like economic conditions can affect stock prices.
3. Liquidity Risk: It may be challenging to sell your stocks quickly if the market conditions are unfavorable.

To benefit from stocks, it’s essential to research companies, diversify your investments, and have a long-term perspective. Understanding the market, economic conditions, and the company’s financial health are essential in making informed investment decisions in stocks. Remember, investing in stocks should be considered as a long-term endeavor rather than a get-rich-quick scheme.

When your buy order is immediately cancelled after you place a buy limit order by the Order Management System (OMS), it might be due to several reasons. One possible reason could be that the price you set in your buy limit order is too low compared to the current market price of the security you are trying to buy. Let’s break it down further for better understanding.

Imagine you are at a local market in Alaba International Market, trying to buy a popular product like rice. There are different traders in the market selling the rice at a variety of prices, and you decide to put a limit on the price you are willing to pay. Now, if the current market price of rice is higher than the price you set in your order, the traders might not be willing to sell to you at that lower price immediately. Similarly, in the financial market, if your buy limit order price is below the prevailing market price of a stock or security, the system may cancel your order because there are no sellers willing to accept your price at that moment.

The OMS, like a market facilitator, tries to match buy and sell orders at prices that are acceptable to both parties. If your buy limit price is below what sellers are willing to sell at, the OMS cancels your order because your price is too far from the market reality. This ensures that you don’t accidentally end up buying at a price significantly different from the true value of the security.

To address this, consider updating your buy limit price to be more in line with the current market price. This adjustment can increase the likelihood of your order being executed successfully without immediate cancellation by the OMS. It’s like adjusting your price at the market in Alaba to align with the prevailing price of rice.

Remember, in both the physical market and the financial market, prices are determined by the forces of supply and demand. By setting more realistic limit prices, you increase the chances of your orders being matched in the financial market, just like you adjust your offer price at the local market to match prevailing rates. Taking these steps can lead to a smoother buying experience in the financial market.

Opening an investment account for your one-year-old baby is a thoughtful step towards securing their financial future. As a new investor in Nigeria, it’s great that you’re considering such a long-term strategy. Let’s break it down into simple steps to help you understand how it works and how you can build wealth for your children.

Understanding the Capital Market and Money Market:

Capital Market: The capital market is where long-term securities such as stocks and bonds are bought and sold. It provides a platform for individuals and institutions to invest in companies by buying shares or lending money through bonds. Investors can earn returns through capital appreciation (increase in asset value) and dividends on stocks or interest payments on bonds.

Money Market: The money market, on the other hand, is where short-term debt securities like Treasury Bills and commercial papers are traded. These investments are considered low risk and highly liquid, making them suitable for short-term cash management and preserving capital.

How to Build Wealth for Your Children:

1. Start Early: The power of compounding works best when you start investing early. By investing consistently over time, you allow your money to grow exponentially.

2. Set Clear Goals: Define your financial goals for your children, such as education funding, starting a business, or buying a home. Knowing your objectives will help you tailor your investment strategy.

3. Choose the Right Investment Vehicles: Consider long-term investment options like mutual funds, stocks, bonds, and possibly a mix of these to diversify your portfolio.

4. Open a Trust or Custodial Account: Since your child is a minor, you can open a trust or custodial account in their name, with you as the guardian managing the investments on their behalf until they come of age.

5. Consider Education-Specific Investments: Look into education savings plans like the Nigerian University Commission’s National Education Bank Accounts or specific investment products designed to fund education expenses.

6. Regular Review and Rebalancing: Monitor your investments regularly to ensure they align with your goals, risk tolerance, and the market conditions. Rebalance your portfolio when necessary to stay on track.

7. Educate Your Children: As your children grow, involve them in discussions about money, saving, and investing. Teach them financial literacy early on to help them make sound financial decisions in the future.

By following these steps and staying dedicated to your financial goals, you can create a solid foundation for building wealth for your children’s future. Remember, patience and consistency are key when it comes to investing for the long term.

If you have any more specific questions about investment options or setting up accounts for your children, feel free to ask for guidance. It’s commendable that you are taking steps towards securing your children’s financial well-being early in their lives.