People don’t like the Nigerian Stock Exchange for a lot of reasons. Some reasons include generational trauma, a complex interface, its naira-based nature, and perceptions of slowness and manipulation.

Nigeria’s generational trauma with stocks started with the stock crash in 2008 which was part of a global financial crisis. It wasn’t just in the Nigerian Stock Exchange and many of our parents suffered very huge losses. Don’t forget that for our parents many stop-loss tools or even access to information was limited. They could only use the newspapers and the TV to check stock prices. I remember my mom would buy the papers or lend from Elder Adekunle a retired accountant some houses away and when you get information about your assets and investments in such formats, in such mediums it affects the speed at which you want to take action. So parents passed down a warning that stocks were terrible. There are more regulations and tools now to make the most of the stock markets while being safe. More stocks have been listed too so you have to diversify to manage risks.

In the past, when people wanted to invest in the Nigerian Stock Exchange, they relied on stockbrokers, who were considered very reliable at the time. Some banks actively marketed their stocks, printing brochures and distributing CDs. I remember seeing Digi Clear Window envelope in our post box containing shareholder updates from banks. Liquidity was lower compared to today, so banks made efforts to push their shares to investors. But thanks to apps like Chaka, Bamboo, Get Ladaa, Trove, ARM, Afrinvest, the interface for investing in the Nigerian Stock Exchange is now as easy as ABC.

When putting your money on a table, it’s important to know who else has money on that table. The stock exchange comprises foreign investors (which local investors have recently outnumbered), stockbroking firms, financial institutions, banks etc. Institutions  operate methodically. They move with very informed steps which take time to be decided on. And when they move, it can be perceived as very irrational. They don’t take actions like retailers do. Have you seen the way 20 people cross the road when the traffic light is not green and cars stop? That’s how the market behaves when institutions dominate the fraction. It ends up making it look like the markets are manipulated. The local stock brokers and foreign investors are here for the long term and wouldn’t react to the news because they invested calculatively and decided on fundamentals in the first instance. For example, ten stockbroking firms were responsible for 68.91% of the total value between December 23, 2024 and December 27, 2024. On the other hand, foreign investors, who are now outnumbered, have even have to check if the exchange rates are favorable. You can’t expect them to sell their stocks just because your bank was down over the weekend. Sorry. The truth is that this slow reaction to the news or hype is one of the benefits of the Nigerian Stock Exchange. The Nigerian Stock Exchange can’t go lower than 10% in a day and it can go higher than 10% in a day. This makes it a safe investment vehicle against manipulations. Just do you. If you are right, the market will catch up. Another good thing is that retail investors are now outnumbering the institutional investors. This would further lead to market actions decided by more people than a few.

Some don’t like investing in Nigerian stocks because it’s naira based. To be very candid, we’ve had several times whereby the Nigerian Stock Exchange has even out performed the foreign exchanges. I’m talking about the S&P and the Dow Jones. One also needs to consider the fact that sometimes you need to diversify your assets. You can’t have your assets all in crypto and foreign exchanges. If you would consider a very sustainable place for naira based assets, the Nigerian Stock Exchange would be a great option.

In conclusion, the negative perceptions of the Nigerian Stock Exchange stem from generational trauma, a perceived complex interface, its naira-based nature, and assumptions of manipulation. However, advancements in technology, increased accessibility through modern apps, and a more diversified and regulated market have created a more robust investment landscape. While challenges persist, such as concerns about the naira  and the calculated movements of institutional investors, the Nigerian Stock Exchange offers a reliable platform for diversification and sustainable naira-based investments. Embracing the available tools and understanding market dynamics can help rebuild trust and make the exchange a favorable investment vehicle.