Welcome back to the concluding part of this guide! Like we explained last week, a lot of people think investing in the Nigerian Stock Exchange (NSE) is only for wealthy people, which is incorrect. That’s why this guide exists, to help you also invest in the NSE and maybe make some money off that.
In the first part of this guide we covered getting started, things you need to know before you can start trading stocks and shares on the NSE, taxes and clearing of funds. This week we’ll cover withdrawal of funds, trading times, market segments and everything else you should know. Enjoy!
- Withdrawals: After you sell equites (stock & shares), the money remains in your brokers account until you request a withdrawal. If you are using an online service, then you should be able to withdraw directly from the app/platform. Note that the money will be paid into the account you provided when you registered for a stockbroking account.
- Can I trade equities anytime I want?: Unfortunately, no. The NSE usually opens pre-market trading at 9:30am. In pre-market trading, you can place bids or offers for stocks you’re interested in and get a sense of what prices stocks and the market as a whole will open officially for the day. Pre-markets close by 10am and regular trading starts immediately after. The NSE closes at 2:30pm, after which you can trade equities until the next day.
- Segments of the market: The markets are divided into segments based on different levels of liquidity (how much trading of stocks happen). The different segments are Premium Board, Main Board, and the Alternative Stock Exchange Market ( ASEM). The Premium board is made up of the most capitalized (and traded) stocks on the NSE which are Zenith Bank, FBNH and Dangote Cement. On the main board, there are about 190 stocks and it is also just as liquid as the premium board. The ASEM is for smaller stocks and not very liquid i.e you might not see the stocks to buy and even if you buy, there are very few buyers available.
- Indexes are key: Like other stock markets all over the world, the NSE also has indexes. Think of them as measuring sticks for the entire NSE. The first is the All Share Index which tracks the general performance of all the stocks on the NSE daily. Then there are sub-indexes for different industries – banking, agriculture, insurance, oil and gas etc. There’s also the NSE 30 which tracks the performance of the 30 biggest stocks on the NSE.
- Data and information will make you money: Making money by investing in the NSE depends on how much data and information you can get your hands on. That’s the only to know which companies are doing (so you can buy their shares) and those that are not doing so well (so you can avoid their shares). Experts advise that you don’t depend on the NSE for that info but instead subscribe to newsletters from your stockbrokers or check the “investor relations” section of company websites for the earnings reports and other useful info. Results are published quarterly by companies.
- Dividends: Outside of the money you make trading equities (aka capital gains), you also earn other returns on your investment in the form of dividends. These can either be paid to you in cash, stock (script dividends) or a combination of both – depends on the company. Make sure you visit your registrar and give them your bank account details – that’s where your cash dividends will be paid into – which is usually paid electronically into your bank account. They’ll also require some form of identification and other relevant documents. Once that is done, you’ll start receiving your dividends as soon as the company pays it – script dividends are credited to your CSCS account by your registrar simultaneously.
That brings us to the end of this guide. With these tips and inside gist, you too can invest in the Nigerian stock exchange and make some money! As always, when you win, we win. To the moon!