Nigeria has the largest economy and the third most developed financial market in Africa. This impressive record comes with no surprise as the country boasts of one of the world’s strictest and most secure financial systems. While that’s the case, its strictness means the extensive regulation of all participants dealing in its financial markets.
At the same time, the financial markets leave endless possibilities open to investors. Aside from forex trading in Nigeria, there are many other legal and well-regulated mediums for investment. Although certain instruments and assets like cryptocurrency are illegal in the country, many legal choices are just as profitable to investors.
Legal Financial markets to invest in
Here are some legal financial markets to invest in Nigeria:
Billions of naira are traded on the floors of the Nigerian Exchange Group (NFX group) daily, and it’s not limited to institutional investors alone. The total market value of the Nigerian stock market is over ₦20 trillion; that suggests a reasonable amount of liquidity to handle major transactions if you intend to go in hard.
Lastly, you will need to seek licensing from NGX REGCO to be able to conduct your trades legally. While that’s the case, you can also seek the support of a certified financial analyst and broker to handle your transactions for you.
CFDs in Foreign Exchange Market (Forex)
This medium for investing in the financial market needs no introduction. The forex market is a globally recognized market for the exchange of currencies. While most international businesses need it to exchange their currencies across different accounts, it can also be traded by individual investors in the form of CFDs.
Trading the forex market through the Contract For Difference (CFD) model is open to both institutions and retail investors in the country. Aside from forex, other asset classes, including the previously mentioned stocks, can also be traded on brokerage platforms using CFDs.
The bond market (Treasury Bonds) is a medium through which companies and governments raise money to finance projects. As an investor, your activities will involve purchasing these bonds and selling them for an increased amount within a specific period.
Just like trading the stock market, you will need the assistance of a financial advisor or analyst working on the floors of the NGX.
Aside from these popular methods, Nigerian investors can also participate in OTC securities transactions through the NASD. While most high-profile investment opportunities and methods require the assistance of a financial analyst or advisor, transacting with CFDs requires only registration with a licensed brokerage platform that operates within the country.
JUST IN: CBN Raises Benchmark Interest Rate to 13%
By Dipo Olowookere
For the first time in two years, the Monetary Policy Rate (MPR) has been raised by the Central Bank of Nigeria (CBN) to 13.0 per cent from 11.5 per cent.
Mr Godwin Emefiele, the Governor of the CBN, who announced this development on Tuesday in Abuja, explained that the decision to increase the benchmark interest rate was taken at the Monetary Policy Committee (MPC) meeting held yesterday and today.
While addressing financial reporters this afternoon, Mr Emefiele said members of the committee were unanimous with the decision to hike the rates as it was the best thing to do after holding them for about two years.
According to the central bank chief, one of the reasons for raising the rate is to control liquidity ahead of the 2023 general elections as politicians would be expected to flood the system with cash in a bid to woo voters.
However, the other parameters were left unchanged by members at the gathering as the Asymmetric corridor remained around the MPR at +100/-700bps, the Cash Reserve Ratio (CRR) at 27.5 per cent and the Liquidity Ratio (LR) at 30.0 per cent.
Nigeria’s GDP Grows by 3.11% in Q1, What Next?
By Lukman Otunuga
There are two ways one could interpret Nigeria’s latest Gross Domestic Product (GDP) figure of 3.11% in Q1 of 2022.
The optimists will say the country’s economy grew for the sixth consecutive quarter in Q1 while pessimists may highlight how economic growth slowed for the third consecutive quarter.
Either way, Nigeria’s economy continues to display resilience against external and domestic risks. With the improvement in the non-oil sector driving growth, this may brighten the growth outlook. But could these be signs of Nigeria breaking away from the chains of oil reliance to derive growth from sustainable sources? It may be too early to come to any meaningful conclusion. However, the report is encouraging and illustrates progress made by the country in reclaiming stability post-Covid-19.
With economic conditions somewhat improving, the Central Bank of Nigeria (CBN) is unlikely to raise interest rates this week. Given how Africa’s largest economy has been able to maintain growth in the past six quarters on the back of loose monetary policies by the CBN, a rate hike could disrupt Nigeria’s economic recovery.
As the global war against inflation rages on, central banks are stepping up.
However, the CBN is likely to remain on the sidelines for now. Nevertheless, inflation is still a cause for concern with consumer prices accelerating for the third straight month to 16.82% in April 2022.
With the general elections around the corner, pre-election spending could translate to rising price pressures. On top of this, the widening policy divergence between the Federal Reserve and the CBN could punish the Naira.
It’s worth keeping in mind that the dollar remains heavily supported by aggressive Fed rate hike bets and is likely to remain strong for the rest of 2022. A powerful dollar is bad news for emerging market currencies including the Naira which continues to depreciate in both the official and unofficial markets.
Lukman Otunuga is the Senior Research Analyst at FXTM
NGX All Share Index Weakens Further by 0.13%
By Dipo Olowookere
The bearish sentiment on the floor of the Nigerian Exchange (NGX) Limited continued on Monday as the bourse further depreciated by 0.13 per cent.
Sustained profit-taking especially in the industrial goods sector contributed to the decline suffered during the session as the All Share Index (ASI) slumped by 68.45 points to close at 52,911.51 points compared with the previous session’s 52,979.96 points.
As for the market capitalisation, it depreciated by N37 billion amid sell-offs in 24 stocks to settle at N28.525 trillion as against last Friday’s closing value of N28.562 trillion.
On the first trading day of this week, the insurance sector depleted by 2.32 per cent, the industrial goods sector fell by 0.09 per cent, while the energy, banking and consumer goods counters increased by 0.28 per cent, 0.10 per cent and 0.05 per cent respectively.
Presco led the losers’ chart yesterday with a price decline of 10.00 per cent to trade at N180.00, Global Spectrum Energy Services lost 9.97 per cent to finish at N3.07, Neimeth fell by 9.66 per cent to N1.59, UAC Nigeria depreciated by 8.33 per cent to N13.20, while NEM Insurance retreated by 7.74 per cent to N4.05.
The gainers’ log had 22 members on Monday, with Conoil leading after its value improved by 9.95 per cent to N34.25. MRS Oil gained 9.93 per cent to quote at N14.95, McNichols appreciated by 9.86 per cent to N2.34, Academy Press increased its price by 9.76 per cent to N1.35, while NPF Microfinance Bank expanded by 8.02 per cent to N2.02.
On the activity chart, a total of 263.3 million stocks worth N3.6 billion exchanged hands in 4,856 deals during the session compared with 436.6 million stocks worth N3.2 billion bought and sold in 4,716 deals in the preceding session. This implied that the volume of trades depreciated by 39.68 per cent, while the value of trades and the number of deals increased by 10.15 per cent and 2.97 per cent respectively.
Jaiz Bank closed the day as the most active stock with the sale of 114.0 million units valued at N101.8 million, GTCO transacted 12.9 million shares for N302.8 million, Transcorp exchanged 12.8 million stocks worth N16.7 million, Access Holdings traded 11.7 million equities valued at N115.7 million, while Zenith Bank sold 8.6 million shares for N207.0 million.
Latest News on Business Post
- JUST IN: CBN Raises Benchmark Interest Rate to 13% May 24, 2022
- Famous Black and White Logos: Features and Benefits May 24, 2022
- LandWey to Deliver over 1000 Houses to Nigerians Soon May 24, 2022
- AfDB to Facilitate Nigeria’s Return to Agric Electronic Distribution System May 24, 2022
- Court Orders CBN, NDIC to Pay 1,116 Bank Workers N5.7bn May 24, 2022
- Nigeria’s GDP Grows by 3.11% in Q1, What Next? May 24, 2022
- NGX All Share Index Weakens Further by 0.13% May 24, 2022
- CSCS Leads NASD Bourse to 0.39% Loss May 24, 2022
- Nigerian Currency Now Trades N618/$1 at P2P, N420/$1 at I&E May 24, 2022
- Oil Settles Higher on Upbeat Demand Amid Bearish Threats May 24, 2022