Economy
Understanding Terms Used in Stock Market (Part 1)
By Dipo Olowookere
The last time, I wrote about key things to take note of before investing in the recharge card business especially with the way fraudsters try to lure unsuspecting victims into the business.
Today, I am focusing on the stock market, explaining some terms used in the sector.
The stock or equity market is one aspect of the capital market some people get confused about because of its high volatility.
By high volatility, I mean you can gain a huge amount in one trade and loss everything in the next transaction. It is unlike the fixed income market, another aspect of the capital market, where at the point of investment, you know what you are getting as profit.
Now to the common terms used in the market.
Share/Equity/Stock
These terms are commonly used interchangeably and they mean the same thing. A share is like an indivisible unit of capital showing you are one of the owners of a company.
When a company, owned by more than one person, is established and registered as a business entity, it must indicate its ownership structure, which is represented by the number of shares held by each of the persons. It is by this percentage the owners share any profit or dividend recorded by the firm during a given period of time.
Now, a company in need of cash to expand its operations can approach the stock exchange to sell its shares to the general public through an Initial Public Offering (IPO), also expanding the number of persons owning stakes in the firm.
When this is done, the stock market regulator, which is the stock exchange, allows trading of the shares of such company on its platform.
The value of these stocks at the market are determined by demand and supply as well as information about company, the sector or the country’s economic and political happenings.
If a company is having an internal crisis that found its way to the public domain, it is natural for some people, who bought shares of the firm, to panic and if they foresee that the crisis could be ‘brutal’, they will quickly offload (sell off) their shares, resulting in many sellers, but less buyers. Like in the elementary Economics, when this happens, the price of the commodity falls; vis-à-vis.
Trade
This is mainly the buying and selling of stocks on the floor of the exchange. It is the process of executing a transaction; selling or buying of shares of a company at the stock market at a particular price.
Deal
It is a single transaction carried out by a shareholder or investor during trading in the stocks of a company at the market.
Volume
The volume of shares is the total number of units of equities traded during a given period of time at the stock exchange. As expected, the volume of shares transacted by investors at any given trading session either rises or falls.
Value
This is the worth of an equity trading at the stock market. In stock market reporting, this could mean the total worth of stocks traded at the market for a given period of time.
Market Capitalisation
This is simply the total value of shares of the company selling its shares at the stock market. For example, if a company has a total of 1,000 shares selling at N5 each, its total capitalisation would be 1000xN5, which gives us N5,000.
As at the close of trading on Thursday, the total value of shares trading at the Nigerian Stock Exchange stood at N13.196 trillion.
All-Share Index (ASI)
The ASI is a bit complex, but I will try to break it down to make it understandable. It is mainly a statistics showing the direction or performance of the stock market.
Because during a trading day, some stocks will appreciate in price, while others will depreciate in value, with some remaining unchanged. As a result, there was the need to have an indicator showing a true reflection the market’s performance at the trading session.
So, in January 1984, the NSE put its index at 100 points and as at yesterday, it closed at 36,427.22 points after gaining 80.42 points.
Bear Market
This is when the market records a loss
Bull Market
This is when the market records a gain
Full Bid
This simply occurs when there are prospective buyers at the stock market but no willing sellers. This happens when investors have information that the stock may appreciate in price and there is a rush to own the stock so as make profit after selling it at a higher price.
Full Offer
This is the direct opposite of ‘full bid’. This occurs when there are prospective sellers of a stock but no buyers.
52 Week High
This is simply the highest value a particular stock was sold at in the past 52 weeks (one year).
52 Week Low
This refers to the lowest value a particular stock was sold at in the past 52 weeks (one year).
I will continue this piece in a subsequent post.
However, before then, please feel free to let me know where you require any further clarification.
By Adedapo Adesanya
Central Securities Clearing System (CSCS) Plc bested three price decliners to lift the NASD Over-the-Counter (OTC) Securities Exchange by 0.05 per cent on Thursday, July 16.
The securities depository company gained N2.29 during the trading day to close at N92.64 per share compared with the previous day’s price of N90.35 per share.
As a result, the market capitalisation of the bourse grew by N1.42 billion to N2.592 trillion from N2.590 trillion, while the NASD Security Index (NSI) improved by 2.36 points to 4,318.87 points from 4,316.51 points.
The three price losers yesterday were led by 11 Plc, which shed N10.00 to end at N240.00 per unit versus Wednesday’s closing value of N250.00 per unit, FrieslandCampina Wamco Nigeria Plc lost N2.34 to finish at N147.66 per share compared with the N150.00 per share it closed at midweek, and Food Concepts Plc depleted by 7 Kobo to settle at N2.42 per unit, in contrast to the preceding day’s N2.49 per unit.
A look at the activity chart showed that during the session, the value of transactions soared by 43.3 per cent to N104.1 million from the preceding session’s N65.2 million, and the number of deals jumped by 39.3 per cent to 39 deals from the 28 deals completed a day earlier, while the volume of trades contracted by 75.7 per cent to 1.2 million units from 4.8 million units.
When trading activities ended for the day, Great Nigeria Insurance (GNI) Plc led the activity chart as the most active stock by value on a year-to-date basis, with 3.4 billion units sold for N8.4 billion, followed by Infrastructure Credit Guarantee (Infracredit) Plc with 2.3 billion units valued at N6.5 billion, and CSCS Plc with 74.9 million units exchanged for N5.3 billion.
GNI Plc also closed the session as the most traded stock by volume on a year-to-date basis, with 3.4 billion units worth N8.4 billion, followed by Infracredit Plc with 2.3 billion units traded for N6.5 billion, and Resourcery Plc with 1.1 billion units transacted for N415.7 million.
By Adedapo Adesanya
The Naira further appreciated against the US Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Thursday, July 16, by 65 Kobo or 0.04 per cent to sell for N1,381.53/$1, in contrast to Wednesday’s closing value of N1,382.18/$1.
This was buoyed by improved FX liquidity to absorb the high demand for Dollars during the trading session.
However, the local currency depreciated against the Pound Sterling in the official market yesterday by N9.48 to close at N1,866.17/£1 versus the preceding day’s N1,856.69/£1, and lost N2.99 against the Euro to quote at N1,582.68/€1 compared with the midweek rate of N1,576.69/€1.
At the parallel market, the Nigerian currency maintained stability against its United States counterpart at N1,405/$1, and at the GTBank FX desk, it remained unchanged at N1,389/$1.
On Thursday, data from the Central Bank of Nigeria (CBN) showed a surge in interbank FX turnover and deal count. Interbank FX activities at the NFEM window increased sharply by 69 per cent to $205.366 million from $121.727 million reported the previous day.
Nigeria’s gross external reserves continue to rise, supported by steady foreign exchange inflows from hydrocarbon receipts, remittances and foreign portfolio investments, boosting market confidence. It settled at $51.893 billion from $51.867 billion the previous day.
The apex bank has also launched a new digital platform that will track every foreign exchange transaction involving Bureau De Change (BDC) operators, marking a major step in its efforts to improve transparency and strengthen oversight of Nigeria’s retail forex market.
In an operational guidance issued on July 15 to authorised dealer banks and licensed BDCs, the CBN introduced the FX BDC Purchase Tracker (FXBT), a centralised electronic portal that will monitor foreign exchange purchases by BDCs from the point of request through approval, settlement and eventual sale.
As for the crypto market, prices were down as the markets weighed fresh US airstrikes on Iran that boosted risk sentiment, with Ethereum (ETH) down by 4.7 per cent to $1,829.37.
Solana (SOL) decreased by 3.6 per cent to $77.49, Dogecoin (DOGE) depreciated by 3.1 per cent to $0.0718, Cardano (ADA) also crashed by 3.1 per cent to $0.1588, Bitcoin (BTC) slumped by 2.9 per cent to $62,820.21, Ripple (XRP) dipped by 2.6 per cent to $1.08, Binance Coin (BNB) fell by 2.3 per cent to $569.02, and TRON (TRX) shrank by 0.8 per cent to $0.3219, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) traded flat at $1.00 each.
By Aduragbemi Omiyale
In a bid to help investors recover about N270 billion in unclaimed dividends in the capital market, a nationwide enlightenment campaign has been launched by the Securities and Exchange Commission (SEC).
This initiative involves town hall meetings that would go around the country to sensitise Nigerians on the need to claim these fallow funds.
The Director General of SEC, Mr Emomotimi Agama, speaking at a town hall meeting in Lagos, said the regulator is not happy that investors, who worked hard to purchase shares in the stock market, have not claimed their profits for many years, making unclaimed dividends pile up.
“The commission considers this situation unacceptable. Funds belonging to investors should ultimately find their way back to their rightful owners,” the SEC chief, represented at the event by the Director of Registration and Exchanges, Market Infrastructure Department, Ms Hafsat Rufai, stated.
He said during this campaign Nigerians would be informed of the unclaimed monies, the role of the National Investor Protection Fund (NIPF), and the procedures for verifying and recovering legitimate claims, stressing that SEC is committed to ensuring that investors’ funds are returned to their rightful owners.
The DG stated that unclaimed monies administered by the NIPF include return funds from public offers, scheme consideration arising from mergers, acquisitions and corporate restructuring transactions, as well as other capital market-related funds that have remained dormant.
He disclosed that the town hall meetings would be held in the six geopolitical zones and the Federal Capital Territory.
In addition, electronic and social media platforms would be used to broaden public awareness on this issue, with efforts to be made to address the transmission of securities following the death of an investor, noting that many families were either unaware that their deceased relatives owned shares or lacked knowledge of the legal and administrative procedures required to transfer such investments to rightful beneficiaries.
“As a result, valuable investments and returns on investments sometimes remain inaccessible for many years, thereby denying beneficiaries the financial benefits intended for them,” he said, urging investors to maintain proper records of their investments and encouraging families to take proactive steps to preserve inherited wealth.
