Are you presently interested in buying shares in Nigeria but you don’t have the necessary information on how to go about it?
In this article, we will be sharing with you the basic details you need to know before venturing into shares buying.
What is Stock?
A stock is a share unit of an organization exchanged by the Nigerian Stock (NSE) on the market. It’s also called a share.
Origin Of Stock
The shares of a company are held by the shareholders. If you go to the CAC to register a company, you normally state that your authorized share capital is N1 m, consisting of 1 million common shares of N1, each. This means that at the beginning of your business your initial capital is N1 million defined by the shares.
Although your capital value can increase over time, your shares will continue until you decide to increase your capital further and register it with the CAC.
If the securities on the floor of NSE are listed, they are tradable as securities that can be bought or sold.
Meaning Of Nigeria Stock Exchange
The NSE is a platform for official transactions between buyers and stock sellers (shares).
In Nigeria, like most trading organizations worldwide, a company needs to follow certain conditions in order to trade its stock in the NSE.
One of the conditions is that the company has to be a public corporation with more than 50 shareholders.
Whenever a corporation first wants to sell shares on NSE, the first public service (IPO) is carried out. The company can subsequently sell its shares as a public offer (PO) or an issue of rights. I’m going to come later to those.
Also note that the NSE is a market place for people to purchase and sell shares, as stated. Those who buy shares during an IPO or during a PO can therefore also sell those shares whenever they want to willing buyers.
As such, if the shares of a company are listed on the NSE, the outstanding shares are bought or sold if a ready seller and a registered purchaser with or without a PO are present.
On the working days of the week, stocks are traded.
Can An individual Buy As Many Shares As Possible?
The stock market is also subject to demand and supply powers as in all business segments.
For instance, if a company has 10million outstanding shares (acquired at the stock exchange), only a portion of it can be sold by its owners.
Thus the maximum amount that you and any other willing buyers can purchase is 5 million, given that only 5 million such stocks are exchanged regularly.
Related To Banking Stock?
Of course, it is! A typical bank has trillions of outstanding shares that are regularly exchanged in the NSE. Therefore, as compared to a small company that potentially has millions, consumers will purchase and sell them more often.
Right Issues And Public Offers
Public proposals are made following a company’s formal public offer on the NSE board.
Companies make public offers when they see a need to finance new ventures, buy fixed assets, or simply grow the company, rather than or in addition to debt.
These may also be loan reduction or science and development projects.
If a company makes a public offering, it may make the share capital available to the public, or only sell such shares to existing shareholders, if it increases its share capital (thus creating new shares).
It is only called a question of privileges when such shares are sold to current shareholders. If you just grant the new owners the rights of those shares, it ensures that they also do so in equal measure to their current ones.
For instance, it could give 2 of every 5 owned the right question. As a consequence of your 1000 shares, an additional 400 shares are offered.
In this way, the shareholders of the businesses raise their shares in comparison to what they initially had if all the problems of rights are resolved.
Can An individual Singlehandedly Go To Buy Shares
This is hardly happening, though, because some might not be prepared to recognize their rights. It makes it possible for others to take over it and increase their shareholding. Rights issues may also be presented to a fresh public question.
Not just that. You can only purchase shares through a shareholder registered in a shareholder business. Whenever you want to buy shares, you must then search for a good bonding company and open an account with them.
There are those that have a minimum sum of money to open an account.
You will then be able to tell them, from time to time, to buy and sell shares on your behalf.
They can also provide you with periodic inventories (portfolio) so you know where you are. You pay the charge in exchange for these services.
Fees to stock marketers are standardized and the regulatory authority for stock market operations is licensed by the Securities and Exchange Commission (SEC). The charges are charged also to NSE, the SEC and VAT are also charged as a fee.
How do I begin to buy the stock now?
You must recognize the companies and the share price that they currently trade before you begin buying shares.
What Is A Share Price?
A share price is a price at which an inventory is being sold on the NSE board.
Which is Worth More? N1 or N100 Shares
This is not how the stocks are assessed. In addition, a unit share price is calculated by dividing its market value by the number of remaining shares. For example, a company with an outstanding 10 million shares and market valuation or N100 m capitalization would have an equity price of N10.
Likewise, another company with outstanding shares of 20 million, would have the same market value as N100 m would, therefore, have a share price of N5. And if you see, they all have the same value for N10 and the other N5.
The only difference is that they have different stakes so that the one is not cheaper than the other.
The explanation is because businesses with more outstanding shares are considered very stable and are therefore not encroached on by the causes of artificial premium (or value) shortages.
Scarcity, as you know, affects the price of items, but does not necessarily mean that it is cheap, costly or even desirable.
How To Know If A Share Is Cheap, or Expensive Or At The Right Price
Now, this is the technological aspect and you need a stock dealer for this.
There are stockbrokers to advise you on the stock that should be bought or sold or kept.
What It Means To Buy, Sell Or Hold
The term “Buy” is when a stockbroker advises you to purchase the stock because they expect that the value of the share price will increase.
On the other hand, “Sell” means that in the results that have been announced early the business is expected to perform badly and their share price will depreciate value and lose money.
The term “Sell” could also mean that they feel that the value of the share has reached its peak and that the price will begin to fall as stock owners expect to sell and make some profit.
The term ‘Hold’ refers to the advice of the stockbrokers: not to sell if you own the stock. They may tell you this because they expect the stock to grow early, or expect any other news about purchasing or selling.