Effect Of Naira Redomination On Stock Market Investments?

It will have no real effect on the value of your investments, but it will definitely cause a lot of confusion.

thanks seun

Welcome to Nigeria.  Put on your seatbelt and enjoy the ride.  (You seem to be new to this country)

No banks that are capitalised @ 100 billion naira will now be 1 billion naira

Please enlighten on the effect of this reforms on savings and investment in shares

Effect Of Naira Redomination On Stock Market Investments?
There would be no negative effect.

There would be no confusion.

The nation would be better for it.

Explanation:
What is being done is redenomination meaning just move the previous value by two decimal places to the left. Meaning if one used to earns 80000.00 naira up till 31 2008, his salary by next month Sept 2008 would be 800 naira.

Old notes wouldbe phased out with the redenominations and 20 new naira note (with strength as present day 2000 naira would emerge) will to-be 5kwould have the same purchasing power as today's five naira.

With massive media campaign, a norm when new naira note is to be the transition would be smooth without any confusion.

By extesnsion, a televsion that used to cost 10000 naira (then it would be old naira) would be equivalent to 100 using new naira notes (ie a bundle of to be/new powerful 20 naira =50pieces). Both old and new notes would be spent concurrently for a given period just as was the case during the last change in naira design.

Finally, the policy would take effect on the cpital market too on 1st sept 2008 and the market value of stocks too as at that day would be devalue by two decimal places to the left across all securities.
That means ABC Bank withmarket price of 50naira as at august 31, would have a mrket price of 50k as at 1 Sept 2001. The listing price of NSE would have been made 1 naira before then (hopefully) all the indices wouldbe rounded off accordingly. That means the new listing price for a new stock to be issue would be 1k.

I do hope I have explained it simply enough. You could post questions on greay areas I would come back to the thread to drop a few more lines!

Lest I forget the nation would be better for it, first the naira would be strongest currency in Africa. Easy conversion rate meaning we would be able to estiomate that a Nigeria earning 50000 per month under old regime would be earning 500 naira/dollars per month under the new regime assuming 1 naira is equivalent to 1 dollar. i guess before then the naira and trhe dollar would be at par ,  if the current global economic and socio-political situation trend persist!

Cheers!

Looks like I have to be more careful issuing out Cheques post redenomination. Say, I intend to issue a cheque of  N150,000 to my broker and then forget to "cancel 2 zeros", men enough money for the Broker ni ye ke ,

Peace Out!

I believe that it wont cause much problem, it will only affect the investors rate of calculations. If you invest you will need to be extremely brilliant t calculate it before jumping into the conclusion because you might be wrong in your calculation.

I am not quite sure there is another set of people on this earth that are as blindly optimistic as Nigerians.
My Gawd!!! We are already sounding as if anything that has worked in other countries has ever worked here.

When Babangida came up with SAP, Nigerian sang to high heavens that that was the panacea to all our economic problems. Today , how far?

Honestly this Soludo guy is beginning to register doubts on my mind about his much touted capabilities. Is he not the same CBN helmsman that introduced the 1000 naira note about a year ago or so. Why this sudden reversal of policy.

I just want somebody to tell me that this is the most important and most urgent of all our economic problems right now.
Please let somebody tell me that re-denominating the naira is far more important than providing basic amenities and infrastructures that even less endowed counties of Africa had since taken for granted.

May God help us

webemerald, a stock worth 1000 will be worth 10. Just cancel 2 zeros to get the new deal

I don't believe that it won't have effect.
agreed it may not be negative but i'm sure things won't be the same.
i'm waiting to hear something from a real stock broker. It may mean investing in certain sectors; all i know is that things won't be the same

if =N=1 is equal to $1   will their purchasing power be the same? I don't think it will be the same.

Nothing Absolutely nothing will happen. the only thing that will happen will be the betterment of all Nigerians

Please does anyone know the implication of this currency issue on FOREX trading?
i need honest, informed and sensible replies please

i like babadudu so if i want to buy it by 2008

now it is 10naira if i knock 2 zeros off it will be 0.100 naira

please i don't understand

I can see CONFUSION here already.

If after all that have been posted here on Nairaland, some landers (that are supposed to be enlightened) are still this confused, I wonder what the case will be with iyalojas and babalojas (marketers).

Nigeria, we hail thee!