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Is The Nigerian Stock Market Truly Efficient?

it is widely believed that the stock prices is an efficient stock market reflects all the available and sufficient information to rational investors. in nigeria where moribund companies have their share prices improving even without any activity. i dont knowif this market is truly efficient. what do you feel.

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while i agree with ideas360 that the stock is most times determined by growth prospect, i must say that the NSE is sot efficient. how do i mean? there are basically two schools of thought that have argued on what determines price at the stock market, while the first posited on overall decision made by sufficient rational investors with adequate information on both the company and the market, the other school has argued that investors behaviour through speculation, blockhead etc can lead to price increase.

though the two schools combine to determine the price of stock, that does not put the NSE in the rank of effecient market in the world. in US when worldcom confessed the accounts window dress sometime in 2002, the stock market was so shocked and affected negatively that the house of common and house of lords jointly passed the famous sarbanes oxley act 2002 to protect the american investors. in nigeria, same thing happened to cadbury nigeria but the market was not moved an inch. instaed of cadbury price depression, the reverse was the case.

personally, am of the opinion that what determines share price in nigeria is not the available information to rational investors but speculation and propaganda combined with mgt accumulation of own shares. time will definitely vindicate us

cheers.

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If one is to do an assessment of the Nigeria stock market by looking at the performance of the companies listed in the market, then it will be said that the market is not truly reflective of the economic realities on ground.

Hey! wait a second, think before you convince yourself that it is not worth investing in after all. Lets come to realize that the performance of any company stock is influenced by two factors, the first being the company's overall growth as regards to it's financial records and business portfolio performances. The second being the rush order demand for it's stocks by investors as a good prospect due to either media hype or speculations. As is always the case when demand exceed supply then price rises.

Among the two scenarios with regard to the Nigeria stock market, the second being the "market Driver" as opposed to the first as relatively obtainable in more matured Western economies. But lets not rule out the practice of price rally or organized bidding on the floor by Brokers for sheer profiteering.

All in all money is made and lost at the same time by various investors in the market and if you ask me I think that is what the stock market is all about. So you see the Nigeria stock Market can be said to be truly efficient in its own capacity.

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