frankiriri:

Pally, You really sound like a pessimist. I can assure you that the situation is not as bad as you see it,
With Pension funds and Foreign investments still coming into the system and the low money market rates the capital market may remain a viable source of capital gain.
Given the right policies the banks, which are the primary drivers of the market will continue to do well. I am only bothered about the multiple at which most of the stocks mare selling. Even when the correction occurs, it will just provide good buying opportunities for discerning investors.
These are the reasons why I advise everyone to focus more on the long term

That`s why i love you frankriri. Let^s go back to basics. in terms of market size and capitalization the nigerian capital market is still relatively under-performing. The total market capitalization of all the quoted companies is about $20 billion dollars compared to about $200 billion for south africa. How many of the companies have market capitalization in excess of $1 billion only one among the banks i think intercontinental so the nigerian stock market has a long way to go and that`s why its still attractive to foereign investors and the cost of trading is still relatively cheap no capital gains tax being levied yet(CGT) just to stimulate the market in terms of  volume and size of deals.

Secondly in any capital market system there are cycles referred to as bulls and bears and already in europe and america the current bull run analysts reckon is gone on too long its an average of 18-24 months the bull run has been going for about 4 years in europe and america so there will be a bear cycle where we expect correction of some sorts this happens so that the over-valued stocks can be come back down to a sensible level and this actually is an opportunity to buy anyway so as frankriri said its a long-term investment. can any of the pessimists on this forum give me an example of a long-term investor say 5 years and above whose investments have gone down overall in the market. This is not to say you cannot trade short term but you have to know what you are doing.

Having said that there has to be proper checks and balances by the capital markets regulators to ensure that investors are not being cheated and that nobody is allowed to manipulate the  market by artificially manipulating stock prices and other sharp practises.

In recent memory the only instances where there have been spectacular stock market crashes was during the great depression of 1930 and  1987. This will happen when there is a cataclysmic occurence and i tell you these are few and far between.

In the same vein that does not mean you shouldnt do your own due diligence by making sure your investment decisions are driven purely by the company fundamentals(educate yourself) and not by market sentiments. If a company has not  been  active in the last 5 years or so and then out of the blues they start declaring mind-boggling profits and results and you are tempted to invest i think  you will have yourself to blame on the long-run and no one else.
So let the gravy-train roll on

Totally on a non Technical level.

I find it hard to talk about Nigerian market as a "Normal Market" and @Roughcut all that capitalization business comparing it to South Africa is shambles, South Africa is seen as being more stable, transparent and less corrupted.

Unless NSE is properly regulated and transparent you can compare from now till tomorrow.

I keep reading of the so called foreign investors coming in to buoy the market and a few that i have investigated on are nothing to write home about just mushroom clubs of a few people who have dosh to launder.

I belong to an investment club in UK, so all I need to do is have a deal with a chairman of a company and bring money in whether by borrow or steal and they will also call me Foreign Investor, total rubbish.

The Foreign investor that will come in are post like coming in to raid to innocent muguns take positions have the companies make noise a bit while everybody rush to buy the shares, price goes up and they pull out.

These folks may be Foreign but they are certainly not investors. Now if Warren Buffet, Deutsche Bank, Longman Sachs and the likes to invest in Nigeria Shares then we have Foreign Investors. Companies like this however will probably prefer to invest in Asia and it's likes, the Asia equity market is equally booming if not better

A good and prudent investor looks for long term and short term, an investor will be interested in fundamentals e.t.c information which is not necessarily available. To get a simple company report, na wahala even when you get it the numbers may be just be that, numbers with not proof or backing. In as much as Nigeria market is flying at the moment corruption is still prevailing in the mind of so many who will want to invest.

There may be a few reputable foreign companies who will come in but I believe they will be Foreign Speculators.

Don't get me wrong there is still money to be made on the NSE at least in the short term.

Hi everyone,
I've got some money to commit over a three month period. I'm trying to buy some penny stocks in sectors that have growth potential. I'm looking at these two:
Afroil, Petroleum Marketing sector
Unity bank, Banking sector
My three month clock is ticking fast so I need to act quick.
But I need this: a resource.especially on the web, where I can view the history of the performance of these stocks in the recent past.
Will appreciate anyone kind enough to give me directions. Thanks.

pl can anyone in the house tell me whats up with sterling bank shares

@femlaj
If you only knew what it is you wanted to know exactly, perhaps,

@femlaj,
the attempted response above only served to confuse me.

Sterling has only released one result so far; 3 mon to Dec 2006 with a PAT of 630M. Not good for a company with 10.6B shares. even if they can make 3B over the full year, the EPS would be 28k and the forward PE is thus 28. Nothing to write home about. Your call.

frankiriri:

Pally, You really sound like a pessimist. I can assure you that the situation is not as bad as you see it,
With Pension funds and Foreign investments still coming into the system and the low money market rates the capital market may remain a viable source of capital gain.
Given the right policies the banks, which are the primary drivers of the market will continue to do well. I am only bothered about the multiple at which most of the stocks mare selling. Even when the correction occurs, it will just provide good buying opportunities for discerning investors.
These are the reasons why I advise everyone to focus more on the long term

Frankriri, I respect your opinions on this forum. I would still like to ask you one question: What has happened to our GDP? Are the Banks really driving the market? Are Nigerians feeling better-off than they were pre-consolidation? You may or may not see it: If there is , correction (as some of the OPTIMISTS choose to call it), the companies that have raised funds from the public at inflated and manipulated prices will be smiling because it is the short term speculators that will lose. Those that buy PO and IPO to be inherited by their children will not be bothered.

RoughCut:

,, the Nigerian capital market is still relatively under-performing. The total market capitalization of all the quoted companies is about $20 billion dollars compared to about $200 billion for south Africa. How many of the companies have market capitalization in excess of $1 billion only one among the banks i think intercontinental so the Nigerian stock market has a long way to go and that`s why its still attractive to foereign investors and the cost of trading is still relatively cheap no capital gains tax being levied yet(CGT) just to stimulate the market in terms of  volume and size of deals.

Secondly in any capital market system there are cycles referred to as bulls and bears and already in eEuropeand aAmericathe current bull run analysts reckon is gone on too long its an average of 18-24 months the bull run has been going for about 4 years in eEuropeand aAmericaso there will be a bear cycle where we expect correction of some sorts this happens so that the over-valued stocks can be come back down to a sensible level and this actually is an opportunity to buy anyway so as fAmericasaid its a long-term investment. can any of the pessimists on this forum give me an example of a long-term investor say 5 years and above whose investments have gone down overall in the market. ,
Having said that there has to be proper checks and balances by the capital markets regulators to ensure that investors are not being cheated and that nobody is allowed to manipulate the  market by artificially manipulating stock prices and other sharp prpractices|_
In recent memory the only instances where there have been spectacular stock market crashes was during the great depression of 1930 and  1987. This will happen when there is a cataclysmic occoccurrenced i tell you these are few and far between.

In the same vein that does not mean you shoshouldn't your own due diligence by making sure your investment decisions are driven purely by the company fundamentals(educate yourself) and not by market sentiments. If a company has not  been  active in the last 5 years or so and then out of the blues they start declaring mind-boggling profits and results and you are tempted to invest i think  you will have yourself to blame on the long-run and no one else.
So let the gravy-train roll on

RoughCut, the all-share-index has appreciated by more than 50% points at half year. If that is underpreformance in your dictionary then I am worried about you. Even before the crash that led to the great depression in the 20s, market did not grow that fast. We all know there is excess liquidity and that is driving the market. When EFCC or ICPC decides to confisconfiscate shares, una go see. Who is better-off that is now investing? Nigerians are still suffering and dying as before. Amenities have not improved, transparency is still far off and we think our economy is booming. It is the wellbeing of the people that determines growth in any economy, not stollen laundered funds, you know. This one we are seeing is film trick.You said above 'proper checks and balances'.Do you mean by Nigerian standards? If so, those checks are there. They were also there before we had failed banks many years ago, they are there as the DG of NSE sits on the board of quoted companies.

The thing I am trying to say is that we are walking a tight rope and any miss-step by any of these big companies may cause a real blow. We do not have the resilience to withstand such a blow. Just like the NYSE was in the 1920s, we are immature and vulnurvulnerablet term trade now in NSE is risky and remember Warren Buffet is a real long termer, not 5 years. that is short! As you say nobody's investment has gone down in the last 5 years, it will be sad to see the gains of 5 years washed away in 5 weeks. We need to work harder at these gains, much harder than we are.

Oseitutu:

Frankriri, I respect your opinions on this forum. I would still like to ask you one question: What has happened to our GDP? Are the Banks really driving the market? Are Nigerians feeling better-off than they were pre-consolidation? You may or may not see it: If there is , correction (as some of the OPTIMISTS choose to call it), the companies that have raised funds from the public at inflated and manipulated prices will be smiling because it is the short term speculators that will lose. Those that buy PO and IPO to be inherited by their children will not be bothered.
.

The banks are driving the stock market right now. Nigerians sure are better off post consolidation because lending has improved to both private and corporate citizens. at least those that can get their act together and keep proper records. My point exactly is that stock prices are too high but there are no viable alternatives to the capital market for now{( with the exception of real estate ( the banks are also playing a key role here, what with the proposed REIT by Skye bank and the various mortgage institutions floated by the banks)-). So the only sensible thing to do is think long term and buy only shares whos fundamentals are rock solid.
Using the Cadbury case as an anology, the company had some problems relating to its past reported profits. Whilst this affected public confidence in the share price of Cadbury it did not in any way affect their share value, so people waited in vain for the shares to drop to N12 and below. My point exactly is that all shares have their firm foundation value- When you pay much more than this price then you are lenghtening the period of time you would recover your money. And for those of you who beleive that the only way to make money in the market is to play it short term - be guided -Cos you may be left holding the short end of the broom.

@ femlaj n Iwerebor

Femlaj!! the level of truth in easimoni advise is rili high but its not 100% i most say, remember presently we av so much money chasin few stocks so anytin can happen n besides banks r now tinkin of movin to N10 n above so anytin as i say can happen, let mi start by sayin wen u trade in stocks do not b shorter dan short term or longer dan long term quitely take ur tym 2pick d rit stock n dnt b greedy,

4 nairalanders do not used d 'P/e ratio' as d only or major criteria in analysing a stock if u av been succeedin u av 2count urself lucky cos NIgeria economic is not tit enuf 2hold d rule dat says d lower d P/E d beta d stock-NYSE is different 4m NSE o, al d easimonis n frankiriris n seuns i dey hail o - dis is my own way of enterin!!!!
Factors dat can drive d price of a stock include
--price of other stocks
--bonus rumour(also dividend rumour)
--institutional investment/divestment
--primary market activities
--illegal buy backs
--market forces(market sentiments)
--GENERAL MARKET/ECONOMIC STATE
--artificial market making
--STRONG EARNINGS REPORTS(PAT,EPS,GROWTH RATE,PEG,lastly P/E ratio)
--technical suspension-pre n post
all of dese fall unda 3 headins namely
1.Market Hearsay
2.D fundamentals of d company
3.D law of demand n supply
remember common sense is also necessary,

Iwerebor!!
u av 2b very very careful in d stock to buy dat can give u gud returns in 3mnths tym, u can invest n get gud returns in d next 3mnths n u can also invest n tie down ur money in d next 3mnths its a fifty fifty tin so i'll say if rili u nid d money in 3mnths tym dnt invest but if u want to b stubborn lik mi n give it a try welcome on board,


let mi start,
FIDELITY is a gud buy dere AGM is within a couple of days so anytin can happen dey r tinkin of share reconstruction n also a public offer of N100billion so d best tym 2enter is now n wait 4 d AGM if d rumour holds stay put n run b4 d suspension 4 d PO or run if d conclusion in d AGM is not satisfactory,
WEMA bank is also a gud buy-its one of d peers of FIDELITY, dey r also tinkin of comin out to raise funds d gud tin is dat dey r tinkin of raisin N100billion n dere audited report will soon hit d market so board d plane n stay put if notin happens within a mnth boy jump off d plane without d pilot knowin
ZENITH bank?? YES ZENITH!! do u no dat bank?do u no dat dey av not given bonus shares b4?do u no dat at d beginnin of d year JIM OVIA d CEO said his bank shud b rated n b along side FBN?do u no dat 4his bank 2b rated as FBN dey shud b considerin givin bonus shares 4 d first tym? n do u no dat d FYE is JUNE n we r in JULY?do u no dat 4now banks can not b traded at N60 n above?who will buy by d way!!do u no dat wen d price of a bank is as high as dat d chances of d bank givin bonus is very very high?do u no dat bonus shares is given in exchange 4money as in ur shares will increase in dat company n d price will reduced in such a way dat it will b equivalent to wen d price is high n no bonus shares is/r given??do u no dat dere is a market rumour of one for two??do u no dat u can buy now n wait if no bonus u can stil escape??but its a big but o as in BUT u av to sleep very close to ur fone in orda to call ur stockbroker n also close to ur computer dat is connected to internet in orda to check price list,
AFRIBANK U AV FIND
AM TIRED 4NOW GUESS I'LL CONTINUE SOON SAY IN TWO DAYS TYM, GURUS PLS COMMENT ON MY FINDINGS,
LASTLY,,,STAYAWAY 4m public offers n stay away 4m insurance sector(dey r stil doin dere capitalisation stuff), Alwys remember HIGH RISK IS D FATHER OF HIGH RETURNS, dey r birds of a , u no na!!!!!!
i'll talk on medium term soon,
N NAIRALANDERS i no it will b a shock but i av to say it do u no dat dere is notin absolutely notin lik LONG TERM STOCKS!!!!let mi explain a stock is only gud as long as d fundamental is gud, so if u pick a stock n consider it as a long term durin u stay wen d fundamentals go bad wat do u do?stay put cos its a long term or buy another company with gud fundamentals?? so lets reason ladies n gentlemen,
ope Femlaj i said sumtin 2u,
my email add is psytarry@yahoo.com letz analyse 2gether

@dollyp1cute,

I find it hard to talk about Nigerian market as a "Normal Market" and @Roughcut all that capitalization business comparing it to South Africa is shambles, South Africa is seen as being more stable, transparent and less corrupted.

Unless NSE is properly regulated and transparent you can compare from now till tomorrow

What are you trying to say!!!!!!!!!!!!!!!!!!! that NSE is a shamble or what and take a look at your conclusion

Don't get me wrong there is money to be make in a short run

, i cant understand you

@Psytarry,
While I find your analysis noteworthy I think you take from it by your delivery, i.e, the Jamaican style rambling you employ.
It made it tedious.

@ All
Anyone hopeful about the performance of Diamond Bank/Fidelity bank/Wema bank in the next three months? Getting an appreciation value of N5 on each in that time will be greatly appreciated. What do you think?

@Evept

Hello all,

im new about shares and stocks although i've heard about it from my friends,i need to know from you guys doing it,how it works and when is the best time to buy shares,the procesure and how can i buy shares because im not in Nigeria?

your advice will be very appreciated,
Thanks,
Evept

For FAQ about investing in Nigerian Stock Market, you can look at falcon securities faq and cashcraft faq. You can get similar useful links to resources at karakataonline.com especially since you are not in Nigeria.  The site provides links to quality resources for nigerian investors and it's free.  You can even create a dummy portfolio and see how it would perform before you actually start investing using the portfolio tool.

BIGBOYLARY:

@dollyp1cute,

What are you trying to say!!!!!!!!!!!!!!!!!!! that NSE is a shamble or what and take a look at your conclusion
, i can't understand you

Of course the NSE is a bit of shamble, and there is good money to be made now if you can gamble well before the wind blows to expose the anus of the crow then everyone will find his/her level. If you have done your home work to have bought a solid company then all you will need to do is have patience for the dust to settle before your stock picks up again.

@dollyp1cute,

Of course the NSE is a bit of shamble, and there is good money to be made now if you can gamble well before the wind blows to expose the anus of the crow then everyone will find his/her level. If you have done your home work to have bought a solid company then all you will need to do is have patience for the dust to settle before your stock picks up again.

You are totally wrong and i disagree wit you on all aspect, AN INVESTMENT CONFERENCE IS ON NOW AT MILLENNIUM HOTEL GROVERSNOR SQUARE IN LONDON TODAY. THEME: OPPORTUNITY IN NIGERIA, if you can make it you will discover more about the possibilities of the new AFRICAN TIGER NIGERIA, .

@easimoni and psytarry
thanks for your responses, appreciate your efforts, cheers

You know, there is some knowledge about stock valuation that if one knew can make one a very rich man ,i.e, how a share is given value.
Why is one more in value and another less in the same sector?
Let's find an answer to this question perhaps it will profit us in a lot of ways.

I disagree with dollpno1 totally. The Nigerian market may be emerging but it is very wrong to describe it as being in shambles. I am surprised that you even want to be a part of something you have described in such terms.
Take a principled stand.

ACCESS BANK PUBLIC OFFER

RECOMMENDATION : STRONG BUY
Access Bank shares is strongly recommended for both the public offer and the market price at the stock exchange floor for those who are not patient enough for the public offer.
This may be the best Public Offer of the year. ( no quarrels)
Access Bank has once more demonstrated that it is Nigeria’s fastest growing bank with its recent quarter 1 results.
QUARTER 1 JUNE 2007
Turnover PBT Tax PAT
2006 11,128.00 4,050 972.90 3,080
2007 5,500.00 1,560 501.30 1,060
Change (%) 102.33% 159.62% 94.08% 190.57%

Access Bank public offer will be raising about 70 billion naira.
Buying the shares at N14.90k will mean getting about 67.79% discount from it’s fair value of N25 (IBTC Research) and 29.67% from its Market Price.

To put simple to those who may not understand this figures, it means for example
1,000 units of Access Bank Offer at N14.90 = N14,900 will be worth N25,000 of its intrinsic value.
A discount of N10,100 on every 14,900 units bought.

This means if I buy 10,000 units at N14.90 @ N149,000, I will likely be gaining 101,000 naira discount on this.
i.e a discount of 101,000 naira on every 149,000 naira.

Offer Price : N14.90
Market Price : 19.32
Fair Value : N25.00
Discount from fair value : 67.79%
Discount from Market price : 29.67%
Projected Price (2008) : N30.00

Current PE at Market Price: 16.64 Industry Average: 37.7
PE at Offer price: 12.83 (extremely attractive)
* * Forward PE at Offer price : 13.55 Industry Average: 22.51
PAT (2007) : N6.083 Billion
Projected PAT (2008) : N13.0 Billion
Current EPS : N1.16
* * Projected EPS (2008) : N1.10

* * including the outstanding shares to be raised from the public offer

KEYS:
PE = Per Earning Ratio
EPS = Earning per Share
PAT = Profit after Tax
PBT = Profit Before Tax

MY STOCK PICKS FOR PUBLIC OFFERS ARE
1. ACCESS BANK PUBLIC OFFER
2. DANGOTE FLOUR INITIAL PUBLIC OFFER
3. JAPAUL OIL & MARITIME

ACCESS @ N14.90
We should expect a 300% to 500% appreciation in 2 – 3 years for Access Bank shares.
In the long term, Access Bank Public offer will more profitable than Dangote flour.
Price appreciation immediately after the offer is sure based on its current low PE Ratio and EPS. The Oceanic effect will surely hit Access since its shares are on bid at the exchange.
Refund of money is not likely since the bank may absorb over-subscribed units.

DANGOTE FLOUR @ N15
Expect immediate appreciation of 80% to 150% in the first few months and expect a gradual appreciation soon afterwords.
The offering of 1.25 billion units of Dangote flour seems very small for a public offer and will make the price to sour immediately after the offer but will not really make much impact after 6 months of the offer as we are seeing in its sister company, Dangote Sugar.
Refund of money is sure in Dangote flour since it is not going to absorb over-subscription.

JAPAUL OIL & MARITIME @ ?
With its high growth rate, Japaul Oil & Maritime will be a stock to watch. Profit after Tax growth in its first quarter March 2007 was 151%.

I wonder how Access is able to grow at 200%.

@Iwerebor

Hi everyone,
I've got some money to commit over a three month period. I'm trying to buy some penny stocks in sectors that have growth potential. I'm looking at these two:
Afroil, Petroleum Marketing sector
Unity bank, Banking sector
My three month clock is ticking fast so I need to act quick.
But I need this: a resource.especially on the web, where I can view the history of the performance of these stocks in the recent past.
Will appreciate anyone kind enough to give me directions. Thanks.

To check the performance over a period, go to www.nsepro.com , click on demo of portfolio tracking service, then click on download data, select the stock you wish to view the history, slect the period you are looking for and click on report.
hope this helps

frankiriri:

I disagree with dollpno1 totally. The Nigerian market may be emerging but it is very wrong to describe it as being in shambles. I am surprised that you even want to be a part of something you have described in such terms.
Take a principled stand.

You are free to disagree with me after all there two sides to a mountain

My principled stand is to make money irrespective of circumstances and I am doing just that, like I said there are still a few choice companies. You don't throw the baby away with the bath water.

You go on and tell me it is not a sham when I can not access company's report easily on line, stockbrokers buy the choice stocks (NASCON) and tell folks they could not find the stock on ground. Price fixes, companies go on suspension indefinitely. Even a simple website they can not get right NSE is down half of the time.

Over here, I go online over to buy my stock when I want to easily at a click of a button without dealing with funky brokers, my dividends are paid at a click of a button, there is endless resources to do stock analysis and comparison, I can get 5 year company reports at a click of a button (Proshare Ng put a request out for company information donation) come on. Share price racks up rubbishy because an IPO is coming and you get a flurry of people being planted at strategic places to hype the shares and almost ram the IPOs down your throat, registrars can take 12-24 months to give certificate and may hold on to certs in order to avoid price falls.

So in Nigeria I am asking my brokers that my dosh has been with them for nearly a month trying to get this or that share and I never got interest. I opened a dealing account here over two years ago and forgot about it because I had sold all the shares called them to reactivate my password and saw a balance of 26pence apparently I had like 15p or so left in the account and they still continued to give me interest all the while.

There are still hiccups and cover ups even in the UK and US, I mean Enron is fresh in mind but not nearly in the ramification of what goes on on NSE.

So from my side of the mountain, it is a shamble. P.S Another word for shamble is Fiasco, disarray, disorder.

Do I still believe in Nigeria, yes and that is another principled stand, Nigeria is my motherland.

@ dollyp1cute,
preach on sista! I don't think anyone has ever described my opinion on the NSE better than you just did. If not for the outstanding returns that you can't get anywhere else, I wouldn't bother. You want to talk shambles? I'll talk shambles; registrars who keep spelling my name wrong and won't correct it (so now I sell once a dividend or bonus is coming my way), a DG that sits on a board of a major company and manipulates it's price to preserve her net worth, price movements sparked by people who've seen the results and start buying before it goes public, unresponsive brokers who can't calculate simple PE (NSE website and Lead Capital) and advertise websites that don't work half the time. DollyP covered the rest.

I think it's like mining diamonds out there, it's all worth it when you find something but the integrity and quality of service leaves a lot to be desired.

It’s Irrational Exuberance, Stupid!
Behind The Figures By Ijeoma Nwogwugwu email: ijeomanwogwugwu@thisdayonline.com, 07.09.2007

http://www.thisdayonline.com/nview.php?id=83178

With due respect to James Carville, but ever since he coined the winning campaign slogan, ‘It’s the Economy, Stupid’ when he was the campaign manager in charge of Bill Clinton’s 1992 US presidential bid, several commentators have rephrased it to emphasize  different themes and view points. Borrowing a leaf from Mr. Carville it has become necessary to re-coin his catch phrase with some assist from Alan Greenspan, the former US Federal Reserve Chairman, as a basis for assessing the true state of the Nigerian capital market.
Last month, the Stock Exchange’s Director-General, Ndi Okereke-Onyuike, tried to shore up investor confidence in the capital market when she told international investors at a forum in London that return on investment in the Nigerian market was one of the highest in the world. According to her, returns were as high as 400 per cent making it an attractive investment destination for hedge funds and institutional investors. The Director General was absolutely right.
The Nigerian capital market has consistently posted impressive results in the last couple of years, and has continuously bucked market trends particularly during bear runs and market corrections in other parts of the world. For instance, year to date indices for the first half of 2007 show that the All Share Index (ASI) rose by almost 54 per cent to 53,336.46, while market capitalization hit N7.8 trillion by the end of June, representing a gain of almost 80 per cent from the beginning of the year.
Investor confidence in the market has been buoyed by strong demand for stocks in mostly the banking sector, which by the end of last month accounted for 45 per cent of market turnover. This is in spite of the fact that dividend yields in the banking sector were far below the market average. The building and construction sector has also enjoyed a good rally on the back of macro-economic variables and an anticipated huge infrastructure spend of N1.5 trillion by the Federal Government between 2007 and 2008 which should give cement manufacturers extraordinary potential for increased revenues.
Also, isolated stock price gains made by Dangote Sugar Plc after an initial public offer, UBA after its hybrid offer and an anticipated First Bank rally once the technical suspension is lifted on its share price following the collation of returns on its N100 billion offer, will push the market to new record highs before the end of the third quarter. The resultant effect is that the massive capital gains posted in the market has attracted a deluge of investors who want to cash in on an unbelievable rally before it bottoms out. Hang on a second. Did I just predict gloom?
Yes I did, because in spite of Okereke-Onyuike’s rosy outlook, the Nigerian stock market is bound to bottom out in the months ahead because the fundamentals just do not add up. First and foremost, a capital market cannot be isolated from the environment in which it operates. The market, according to Financial Derivatives Company, an investment and economic and financial advisory firm based in Lagos, was by June ending trading at 43.67 times earnings, which when factored against real or nominal GDP forecasts for the year of some 6 per cent, does not justify the stock market rally. Second, dividend yields on actively traded sectors like banking are on average falling because their earnings relative to share capital are weak. In fact, with dividends yields in the market falling to an estimated 3 per cent (as against bond yields of 14 per cent), this should make a stock market plunge inevitable as investors will begin to look for more attractive avenues in which they can invest their funds.   
Of greater worry is the fact that most stocks have become overvalued due to market manipulation by operators, excess money supply and irrational exuberance on the part of investors looking to make quick gains from the capital market. If truth be told, most of these investors are speculators, as opposed to long term investors, who are by nature fickle and just want to make huge capital gains before cashing in on their shares once there is any sign of instability. Investors in this category are mostly made up of international hedge fund managers who have been bringing in ‘hot money’ (it is estimated that hedge funds have invested some $4 billion in the Nigerian capital market since 2006).
However, hedge funds will normally be the first to make a run for the exit once there is any form of instability, a significant policy flip flop or in the event Nigeria suffers a sovereign-risk downgrade. For them, they would not lose sleep over Nigeria because their investments here account for an infinitesimal part of their portfolio. Yet these same funds constitute a significant chunk of the NSE’s market capitalization, and if withdrawn hurriedly to safer destinations, could portend a bad omen for the market. 
In addition to hedge funds are Nigerian speculators who have been borrowing huge sums of money from banks to invest in stocks. Presently, it is estimated that speculative trading being funded by borrowed funds has risen to 85 percent. And although the banks that are lending the funds are holding onto the share certificates as collateral, the snag is that if there is a systemic default on the part of borrowers, banks will be compelled to sell the shares to recover their funds. If this were to happen, selling the shares will become a self fulfilling prophecy as prices are bound to crash.
Already, the Central Bank has read the writing on the wall by expressing concerns over the level of margin that is available to speculative investors and is preparing to sanction banks that have been financing margin trading in the stock market. The National Pension Commission (Pencom) also recently disclosed that it intends to scrutinize Pension Fund Administrators’ compliance with investment guidelines and portfolio composition to ensure there is no overweight in equities investment.
It is quite apparent that the Nigerian capital market may be heading for an imminent market correction of sorts. Whether the correction will take the form of bear run for a prolonged period or a fast and furious crash is still subject to debate among market analysts. What is not being debated is that share prices in the Nigerian market are generally overvalued and cannot be justified when subjected to any form of analytical rigour. Concerns also continue to abound that the overstatement of its financial accounts by Cadbury Nigeria Plc may not be an isolated case, and that there could be other major blue chip companies buried in concrete. Should information sip into the market that other companies have been trading on false information the market is bound to take a massive hit.
The consequences of a financial market melt down and its systemic consequences especially in the banking sector need not be repeated on this page. What we have today is a stock market bubble that has been kept afloat under the wrong assumptions. Regulators would need to step promptly with all sense of responsibility to ensure it does not happen. The market must be protected from ignorance, market manipulation and pervasive irrational exuberance which have taken hold of investors. The Nigerian market remains an exotic one and unfortunately does not have the circuit breakers that have been introduced in more mature markets to stem a free fall. As Mr. Rewane Bismark, CEO of Financial Derivatives Company, during a presentation on the state of the Nigerian Economy at the Lagos Business School three months ago warned: “Don’t be long and wrong.”

….Speaking of Stock Price Manipulation

Please could some one explain why it’s taken this long to lift the technical suspension placed on Transnational Corporation of Nigeria Plc’s (Transcorp) share price? Trading was first suspended on the company’s stock at N9.71 per share last December during its initial public offer. Three months later it was lifted, but was suspended for the second time without prior notice to traders after four days of trading saw its share price plummet to N8.34. Its stock price took a hit at the time because investors who had bought Transcorp’s share at N1.00 per share during the private placement ignored the holding period imposed on them and started to dump their shares.
For them the temptation was too great to ignore. Preparatory to the IPO their stocks had been split into two, thus doubling their holdings in the company. This along with a huge capital gain of N8.71 per share made many of them instant multimillionaires and billionaires, which they just had to translate into raw cash. In any case, suspension was once again lifted in April, but once more Transcorp’s stock price went into another free fall to below N8.00 per share. By this time the Nigerian Stock Exchange had had enough and placed another suspension on the company’s shares to stop it from falling below the offer price of N7.50 per share.
The Stock Exchange went a step further. It reversed all the trading that had taken place on the company’s shares by reverting to the pre-IPO price of N9.71 per share. The excuse given by the Exchange was that collation of results had not been concluded by the Issuing Houses to the offer and as such suspension should not have been lifted in the first instance. Worse still, the media at the time erroneously reported that Transcorp’s shares had made a huge percentage gain when its share price was moved back up to N9.71 per share. 
It was a gain quite alright. However, it was not one that occurred due to market fundamentals. It took place because the stock price was forcefully and manually manipulated with the full knowledge and approval of the Director General of the NSE, Ndi Okereke-Onyuike. Incidentally, she is also a shareholder and chairman of Transcorp. Moreover, the reversal by the NSE contravened its own rules which do not permit more than a 5 percentage movement on any share price in a single day of trading.
Meanwhile, no word has been heard from the Stock Exchange as to if investors who had bought the shares when the suspension was lifted twice have got a refund of their money given that their investment in the stock was nullified ignominiously. Alternatively, neither have they been informed if they shall be entitled to their shares and certificates, if and when trading is ever lifted.
The technical suspension on Transcorp’s share is indeed mind boggling to say the least. Never in the history of the Nigerian capital market has a stock price been so brazenly manipulated. It is even uncertain if technical suspensions were kept this long on banking stocks two years ago during the period of banking consolidation when the Central Bank took its precious time verifying the authenticity of investors buying up the stocks. The toothless bulldog that is the Securities and Exchange Commission should awake from its slumber and look into this mysterious suspension imposed on Transcorp’s shares. It also needs to protect investor who invested in its stock when suspension was lifted twice this year. There is only so much Transcorp and NSE can do to keep a circumspect stock afloat.

@dollyp1cute,


You are wrong again and i said i disagree with you in all aspect, NSE is not a SHAMBLE take that, we still have many
rivers to cross no doubt about that and we shall crumble , stumble and rise till we get to the highest hight, if Rome was
not built in a day, why do you want total perfections from the NSE as you known its and still an emerging market, that still have to grow,just take a look at the history of London stock exchange DO YOU THINK ALL THERE PERFECTION START TODAY?

The London Stock Exchange is one of the world’s oldest stock exchanges and can trace its history back more than 300 years. Starting life in the coffee houses of 17th century London, the Exchange quickly grew to become the City’s most important financial institution. Over the centuries following, the Exchange has consistently led the way in developing a strong, well-regulated stock market and today lies at the heart of the global financial community.  

1698

John Castaing begins to issue “at this Office in Jonathan’s Coffee-house” a list of stock and commodity prices called “The Course of the Exchange and other things”. It is the earliest evidence of organised trading in marketable securities in London.

1698

Stock dealers are expelled from the Royal Exchange for rowdiness and start to operate in the streets and coffee houses nearby, in particular in Jonathan’s Coffee House in Change Alley.

1720

The wave of speculative fever known as the “South Sea Bubble” bursts.

1748

Fire sweeps through Change Alley, destroying most of the coffee houses. They are subsequently rebuilt.

1761

A group of 150 stock brokers and jobbers form a club at Jonathan's to buy and sell shares.

1773

The brokers erect their own building in Sweeting’s Alley, with a dealing room on the ground floor and a coffee room above. Briefly known as “New Jonathan’s”, members soon change the name to “The Stock Exchange”.

1801

On 3 March, the business reopens under a formal membership subscription basis. On this date, the first regulated exchange comes into existence in London, and the modern Stock Exchange is born.

1802

The Exchange moves into a new building in Capel Court.

1812

The first codified rule book is created.

1836

The first regional exchanges open in Manchester and Liverpool.

1845

More speculative fever – this time “Railway mania” – sweeps the country.

1854

The Stock Exchange is rebuilt.

1876

A new Deed of Settlement for the Stock Exchange comes into force.

1914

The Great War means the Exchange market is closed from the end of July until the new year. The Stock Exchange Battalion of Royal Fusiliers is formed – 1,600 volunteered, 400 never returned.

1923

The Exchange receives its own Coat of Arms, with the motto “Dictum Meum Pactum” (My Word is My Bond).

1939

The start of World War Two. The Exchange is closed for 6 days and reopens on 7 September. The floor of the House closes for only one more day, in 1945 due to damage from a V2 rocket – trading then continues in the basement.

1972

Her Majesty the Queen opens the Exchange's new 26-storey office block with its 23,000sq ft trading floor.

1973

First female members admitted to the market. The 11 British and Irish regional exchanges amalgamate with the London exchange.

1986

Deregulation of the market, known as “Big Bang”:

Ownership of member firms by an outside corporation is allowed.
All firms become broker/dealers able to operate in a dual capacity.
Minimum scales of commission are abolished.
Individual members cease to have voting rights.
Trading moves from being conducted face-to-face on a market floor to being performed via computer and telephone from separate dealing rooms.
The Exchange becomes a private limited company under the Companies Act 1985.

Please can you tell me how old is NSE, i accept we have some faults but all hope is not lost its still one of the highest return in the World.

hmm no wonder they are still begging these foreign coys to come in after several years, naturally they would come in without invitation just like they are diving into the asian markets. those people are not globetrotting spewing numbers around, those countries don't have 400% returns but still they are getting these foreign dosh into their stock exchange.

Fair enough Rome wasnt built in a day;it wasnt built on rotten plank of wood either  we need to get the foundation right
_{the NSE is a bit like uba bank, people still have to queue several days to get their money}

loma:

It’s Irrational Exuberance, Stupid!
Behind The Figures By Ijeoma Nwogwugwu email: ijeomanwogwugwu@thisdayonline.com, 07.09.2007

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With due respect to James Carville, but ever since he coined the winning campaign slogan, ‘It’s the Economy, Stupid’ when he was the campaign manager in charge of Bill Clinton’s 1992 US presidential bid, several commentators have rephrased it to emphasize different themes and view points. Borrowing a leaf from Mr. Carville it has become necessary to re-coin his catch phrase with some assist from Alan Greenspan, the former US Federal Reserve Chairman, as a basis for assessing the true state of the Nigerian capital market.
Last month, the Stock Exchange’s Director-General, Ndi Okereke-Onyuike, tried to shore up investor confidence in the capital market when she told international investors at a forum in London that return on investment in the Nigerian market was one of the highest in the world. According to her, returns were as high as 400 per cent making it an attractive investment destination for hedge funds and institutional investors. The Director General was absolutely right.
The Nigerian capital market has consistently posted impressive results in the last couple of years, and has continuously bucked market trends particularly during bear runs and market corrections in other parts of the world. For instance, year to date indices for the first half of 2007 show that the All Share Index (ASI) rose by almost 54 per cent to 53,336.46, while market capitalization hit N7.8 trillion by the end of June, representing a gain of almost 80 per cent from the beginning of the year.
Investor confidence in the market has been buoyed by strong demand for stocks in mostly the banking sector, which by the end of last month accounted for 45 per cent of market turnover. This is in spite of the fact that dividend yields in the banking sector were far below the market average. The building and construction sector has also enjoyed a good rally on the back of macro-economic variables and an anticipated huge infrastructure spend of N1.5 trillion by the Federal Government between 2007 and 2008 which should give cement manufacturers extraordinary potential for increased revenues.
Also, isolated stock price gains made by Dangote Sugar Plc after an initial public offer, UBA after its hybrid offer and an anticipated First Bank rally once the technical suspension is lifted on its share price following the collation of returns on its N100 billion offer, will push the market to new record highs before the end of the third quarter. The resultant effect is that the massive capital gains posted in the market has attracted a deluge of investors who want to cash in on an unbelievable rally before it bottoms out. Hang on a second. Did I just predict gloom?
Yes I did, because in spite of Okereke-Onyuike’s rosy outlook, the Nigerian stock market is bound to bottom out in the months ahead because the fundamentals just do not add up. First and foremost, a capital market cannot be isolated from the environment in which it operates. The market, according to Financial Derivatives Company, an investment and economic and financial advisory firm based in Lagos, was by June ending trading at 43.67 times earnings, which when factored against real or nominal GDP forecasts for the year of some 6 per cent, does not justify the stock market rally. Second, dividend yields on actively traded sectors like banking are on average falling because their earnings relative to share capital are weak. In fact, with dividends yields in the market falling to an estimated 3 per cent (as against bond yields of 14 per cent), this should make a stock market plunge inevitable as investors will begin to look for more attractive avenues in which they can invest their funds.
Of greater worry is the fact that most stocks have become overvalued due to market manipulation by operators, excess money supply and irrational exuberance on the part of investors looking to make quick gains from the capital market. If truth be told, most of these investors are speculators, as opposed to long term investors, who are by nature fickle and just want to make huge capital gains before cashing in on their shares once there is any sign of instability. Investors in this category are mostly made up of international hedge fund managers who have been bringing in ‘hot money’ (it is estimated that hedge funds have invested some $4 billion in the Nigerian capital market since 2006).
However, hedge funds will normally be the first to make a run for the exit once there is any form of instability, a significant policy flip flop or in the event Nigeria suffers a sovereign-risk downgrade. For them, they would not lose sleep over Nigeria because their investments here account for an infinitesimal part of their portfolio. Yet these same funds constitute a significant chunk of the NSE’s market capitalization, and if withdrawn hurriedly to safer destinations, could portend a bad omen for the market.
In addition to hedge funds are Nigerian speculators who have been borrowing huge sums of money from banks to invest in stocks. Presently, it is estimated that speculative trading being funded by borrowed funds has risen to 85 percent. And although the banks that are lending the funds are holding onto the share certificates as collateral, the snag is that if there is a systemic default on the part of borrowers, banks will be compelled to sell the shares to recover their funds. If this were to happen, selling the shares will become a self fulfilling prophecy as prices are bound to crash.
Already, the Central Bank has read the writing on the wall by expressing concerns over the level of margin that is available to speculative investors and is preparing to sanction banks that have been financing margin trading in the stock market. The National Pension Commission (Pencom) also recently disclosed that it intends to scrutinize Pension Fund Administrators’ compliance with investment guidelines and portfolio composition to ensure there is no overweight in equities investment.
It is quite apparent that the Nigerian capital market may be heading for an imminent market correction of sorts. Whether the correction will take the form of bear run for a prolonged period or a fast and furious crash is still subject to debate among market analysts. What is not being debated is that share prices in the Nigerian market are generally overvalued and cannot be justified when subjected to any form of analytical rigour. Concerns also continue to abound that the overstatement of its financial accounts by Cadbury Nigeria Plc may not be an isolated case, and that there could be other major blue chip companies buried in concrete. Should information sip into the market that other companies have been trading on false information the market is bound to take a massive hit.
The consequences of a financial market melt down and its systemic consequences especially in the banking sector need not be repeated on this page. What we have today is a stock market bubble that has been kept afloat under the wrong assumptions. Regulators would need to step promptly with all sense of responsibility to ensure it does not happen. The market must be protected from ignorance, market manipulation and pervasive irrational exuberance which have taken hold of investors. The Nigerian market remains an exotic one and unfortunately does not have the circuit breakers that have been introduced in more mature markets to stem a free fall. As Mr. Rewane Bismark, CEO of Financial Derivatives Company, during a presentation on the state of the Nigerian Economy at the Lagos Business School three months ago warned: “Don’t be long and wrong.”

….Speaking of Stock Price Manipulation

Please could some one explain why it’s taken this long to lift the technical suspension placed on Transnational Corporation of Nigeria Plc’s (Transcorp) share price? Trading was first suspended on the company’s stock at N9.71 per share last December during its initial public offer. Three months later it was lifted, but was suspended for the second time without prior notice to traders after four days of trading saw its share price plummet to N8.34. Its stock price took a hit at the time because investors who had bought Transcorp’s share at N1.00 per share during the private placement ignored the holding period imposed on them and started to dump their shares.
For them the temptation was too great to ignore. Preparatory to the IPO their stocks had been split into two, thus doubling their holdings in the company. This along with a huge capital gain of N8.71 per share made many of them instant multimillionaires and billionaires, which they just had to translate into raw cash. In any case, suspension was once again lifted in April, but once more Transcorp’s stock price went into another free fall to below N8.00 per share. By this time the Nigerian Stock Exchange had had enough and placed another suspension on the company’s shares to stop it from falling below the offer price of N7.50 per share.
The Stock Exchange went a step further. It reversed all the trading that had taken place on the company’s shares by reverting to the pre-IPO price of N9.71 per share. The excuse given by the Exchange was that collation of results had not been concluded by the Issuing Houses to the offer and as such suspension should not have been lifted in the first instance. Worse still, the media at the time erroneously reported that Transcorp’s shares had made a huge percentage gain when its share price was moved back up to N9.71 per share.
It was a gain quite alright. However, it was not one that occurred due to market fundamentals. It took place because the stock price was forcefully and manually manipulated with the full knowledge and approval of the Director General of the NSE, Ndi Okereke-Onyuike. Incidentally, she is also a shareholder and chairman of Transcorp. Moreover, the reversal by the NSE contravened its own rules which do not permit more than a 5 percentage movement on any share price in a single day of trading.
Meanwhile, no word has been heard from the Stock Exchange as to if investors who had bought the shares when the suspension was lifted twice have got a refund of their money given that their investment in the stock was nullified ignominiously. Alternatively, neither have they been informed if they shall be entitled to their shares and certificates, if and when trading is ever lifted.
The technical suspension on Transcorp’s share is indeed mind boggling to say the least. Never in the history of the Nigerian capital market has a stock price been so brazenly manipulated. It is even uncertain if technical suspensions were kept this long on banking stocks two years ago during the period of banking consolidation when the Central Bank took its precious time verifying the authenticity of investors buying up the stocks. The toothless bulldog that is the Securities and Exchange Commission should awake from its slumber and look into this mysterious suspension imposed on Transcorp’s shares. It also needs to protect investor who invested in its stock when suspension was lifted twice this year. There is only so much Transcorp and NSE can do to keep a circumspect stock afloat.

I quite agree with this writer.
To all those that think Nigeria lacks circuit breakers, I want to remind you that the maximum that a share can lose in a day is 5% and while this would not help if all investors are heading for the door it would give those in authorities time to fashion out policies that should shore up the market value.
A case in point is the NSE market crash that occurred between July 2004 and late 2005. That crash was precipitated by the combined effect of the banking consolidation and the removal of public sector funds from banks which in turn resulted in the banks calling in their loaned funds.
When the government realised the effect of their policy they suspended the removal of public sector funds from the banks which in turn stabilised the market a bit.
So while I beleive that there will be a market correction , I am of the opinion that it will in no way be of the magnitude that dollyp and co are advocating.
The funny thing is that it is the investment by speculators and other short term investors that will bring about this crash.
I agree with dollyp on one point though, any investment in the market should be based on fundamentals and only rock solid companies are worthy of my attention right now.

What is the source of this article? Please post a direct link to the page your copied it from.

Pardon the digression.
Its my birthday today

frankiriri:

Pardon the digression.
Its my birthday today

HAPPY BIRTHDAY ON BEHALF OF ALL #LANDERS.
How old are you now

[center]HAPPY BIRTHDAY MAN,[/center].so whats up 4 grabs men?. .Have a lovely day though.Peace