A thread started by Nairametrics founder Ugo Obi-chukwu @ugodre erupted into a tale of bitter stories about experiences of Nigerians investing in the Nigerian Stock Market. The stock market which has returned 23% in the first half of this year and 29.7% last quarter alone in one of its greatest bull run ever. This prompted memories of 2007 prompting Ugo to start the thread.
Tales of woe
The tweets started pouring in after Ugo began a thread titled “Nigeria has had its fair share of worst IPO in the last 2 decades. What is your worst stock market investment ever?”
Nigeria has had its fair share of worst IPOs the last 2 decades. What is your worst Nigerian Stock market investment ever? #worststocks
— Ugo Obi-Chukwu (@ugodre) July 2, 2017
He followed up the tweet with another of his own pointing out some of his worsts
I’ll start off with a few of mine.
UNIC, Japaul, Courteville, Big Treat, Champion Breweries. #worststocks
— Ugo Obi-Chukwu (@ugodre) July 2, 2017
Tweets started pouring in droves with Nigerian telling many tales of despair. One particular tweet that touched a nerve was that of person who explained how he and his wife lost about N100 million in margin loans taken at the time.
Oceanic bank ( me and my wife ) then FBN , we formed a shell company and took a massive margin loan
— olalekan salami (@lecoush) July 2, 2017
Very very bad if I just repeat again . The margin loan was 100m and we contributed 20 pct . I like this discuss, investors , employees etc
— olalekan salami (@lecoush) July 2, 2017
There were tales of some people who used their savings as students to invest in the stock market, only to see their savings disappear and any hope that the stock market is viable evaporate into thin air.
2008-09: 1st job after uni scraped & saved. Sunk into Lasaco, Fidelity, ARM ‘s AGF hoping to cash after NYSC for my postgrad. Disaster!
— Uche Ọna (@luvoski) July 2, 2017
Lost my hard earned savings as an undergraduate in Japaul ☺
— Nigerian by Heart (@ejilauwaemeonu) July 2, 2017
Japaul, Big Treat, Transcorp, Oando were all reoccuring stocks that have left bitter tastes in the mouth of Nigerians
I dare anyone in this thread to come up with a worse stock than AIT.
If you ever bought that stock you are of all men most optimistic.— Nwankosi (@nwankosi247) July 2, 2017
Japaul and daar communications IPOs drove my parents away from the market for good.
— Dotun (@dotun_0) July 2, 2017
The tweets are a stark reminder of how disappointed Nigerians are with the stock market which is also symbolic of why the All Share Index has failed to touch 50, 000 points which it last reached it 2007/2008. Investor apathy remains a huge challenge for the stock market with millions of Nigerians preferring to invest in ponzi schemes instead of investing in a stock market that they believe is rigged against them.
The Nigerian Stock Exchange under the leadership of Oscar Onyema has introduced several initiatives aimed at improving transparency but a lot still needs to be done. Market infractions are observed till today and the Nigerians continue to be fleeced of their money by insider dealing and connivance between officials of quoted companies and market operators.
The Stock Exchange also weighed in on the tweets, albeit late night when most Nigerians had gone to bed, explaining what they have done to restore investor confidence.
The conversations here shows that we can have a vibrant market. The many opinions and feedback will help our market – growth & participation
— NSE Nigeria (@nsenigeria) July 2, 2017
At the NSE, we believe that investor education is a veritable tool towards protecting investors in the capital market.
— NSE Nigeria (@nsenigeria) July 2, 2017
It is unlikely that these set of tweets will pacify millions of Nigerians who have sworn never to invest in the Nigerian Stock Market as most do not believe that things have changed.
The corporate scams are still very much in existence. How can a stock be trading at 50kobo for 5years. That says a lot about our mkt
— Alfred Chiedu (@Alfredino44) July 2, 2017
As things stands, the Nigerian stock market may have just 10 years left before it goes into oblivion. Nigerians have basically found other means of investing their money and not feel cheated or fleeced by market operators and company executives. Nigerians are investing more in cryptocurrencies and looking overseas for equities market and forex trading. As technology continues to make the world smaller, billions of Naira will pour into investing beyond Nigeria and in markets that are more transparent and promise more returns.
An analysts and private equity investor also weighed in explaining that some of the tweets explained that for most private held companies in Nigeria, the stock market is viewed as a place where you can dump lemons. According to him, aside from a few companies most of the well run companies in Nigeria stay out of the stock market. “The incentives are not just there for any serious company to come and invest.”
Just look at the number of IPOs around the world. The Chinese and by extension Asians are dominating. pic.twitter.com/QmB7FanZ6g
— Ugo Obi-Chukwu (@ugodre) July 1, 2017
Nigeria’s equity market is basically in a lull with no more than 5 IPOs in almost 5 years. Right issues and public offers are paltry with only majority shareholders of the company scooping up most of the rights. With a market cap of just N11 trillion with the likes of Dangote Cement, the FUGAZ making up over 35% of market cap, the stock market is as shallow as it gets. It is not just an attractive proposition for serious companies.
The leadership of the Nigerian stocks exchange has a lot of work on its hands if it is to win back some confidence in the Nigerian investor. For now, most Nigerians are reeling and it will take more than big talk to win their confidence back.
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