Expert woos Nigerians to stock investments, active trading
Nigerians have been urged to cultivate and sustain the culture of investing in the stock market, as a reliable means of making money and safeguarding their investments.
The Chief Research Officer of Investdata Consulting, Ambrose Omodion, in an interview with The Guardian, bemoaned the shallow knowledge of market operations by investors in the market, urging the Securities and Exchange Commission to intensify efforts on investors education, even as they continue to introduce other initiatives that would enhance sustainable market rebound.
According to him, there is need for the regulators to educate investors actively on the operations of the market and intensify efforts in their sensitization program aimed at attracting new investors into the stock market.
He said that stock market investments, as an activity that creates wealth and leads to acquisition of assets, should attract the attention of many more Nigerians.
Omodion explained that Nigerians interested in the stock market could start by investing in companies that have consolidated price adjustments; companies of different sizes and in different sectors especially those favoured by government such as agriculture, manufacturing and construction.
“The Securities and Exchange Commission (SEC) and the Nigerian Stock Exchange (NSE) are not doing the needful. It is still the same old people that invest in the market. Nigerians should adopt the culture of saving and investing. The idea of depending on foreign investors is not healthy,.
“Any market that foreign investors constitute more than 20 per cent is not healthy and in Nigeria, they constitute up to 50 per cent of the market and when they exit during crises period, the market will crash,” he said.
Furthermore, he stressed the need for investors to change their attitude of holding shares permanently on long-term basis without taking advantage of capital gains in the short-term end of the market.
He stressed the need to take advantage of capital gains enjoyed by those who buy and sell shares based on vagaries in pricing of stocks, adding that many investors buy shares for keeps, without considering the benefit in the short-term end of the market.
“We have noticed the trend in the market that that many people buy shares and hold. That is not how to invest in the stock market. That is passive investment. They have to be more active to enjoy more value,” he added.
The Head of Research and Investments, FSL Securities Limited, Victor Chiazor, said there is need to improve participation in the Nigerian capital market, but can be achieved through proper campaign and education to increase understanding and perception of the market.
“As of now, a lot of people do not understand the workings and functions of the capital market, hence the need for proper awareness and education. More people use the banking system because they understand and trust the bank. So, people will not invest in a market they do not understand.
“The media, regulators and the capital market operators need to become more aggressive in educating the public by focusing more on the retail market and less on individuals and institutions, who already understand the market, if we are to reach a market participation rate above 50 per cent as observed in the United States,” he said.