While I agree with Ms. Oji’s observation on scant youth participation, I disagree that this lack of participation will lead to the loss of relevance and eventual extinction of the Nigerian stock market. Instead, I am led to believe that the country may lose out on dividends and control of Nigeria’s largest companies if the current patterns of shareholder demographics are maintained.
It could be argued that if foreign companies increase their dominance in the NSE, Nigeria will miss out on a large portion of dividends from major companies, as they would be repatriated to investors outside the country. A number of Nigerian companies such as GTBank and Seplat Petroleum Development Company have been able to secure dual listings on the NSE and the London Stock Exchange .
The global market crash of 2008 led to the Dow losing $1.2 trillion of value in a single day. At that point, investors sold their stocks in panic and left the market in droves. While this was the point of maximum loss, it was also the point of maximum opportunity, and the few who recognised this were able to capitalise and multiply their wealth over the following years.
A stock with a price to book ratio of three or under is generally considered a good buy. However, the retail frenzy surrounding global stocks has driven companies to high price to book ratios in recent times… On the other side of the coin lies Nigerian companies. The average P/B ratio for Nigerian banks currently stands at 0.4. As such, the average Nigerian bank is valued at 60 per cent less than its assets, minus liabilities.