Stock trading is not without risk, especially when market prices are so frequently and quickly swayed by current events. Most recently, a new report from the World Bank warns against slowed down global economic growth due to high-interest rates and political conflicts. The World Bank predicts the global economy could slow to 2.1% in 2023, one of the weakest growth rates in the past five decades, putting the world economy in a precarious position.

To safeguard against worsening economic conditions, some have turned to stock trading to grow their funds. In this post, we’ll look at the outlook of stock trading in Nigeria in 2023 and what investors can expect in terms of potential recovery:

Increased access to markets through digital trading

Currently, many Nigerian investors are interested in stock trading. In fact, Nigeria’s participation in the stock market has led to its ranking as the tenth most stock market-obsessed country worldwide, according to a new study. Nigeria scored 218 out of a possible 700, according to Google Trends data indicating rising interest in phrase
searches for “stocks”, “buy stocks”, and “invest in stocks”. Fortunately, the rise of digital trading platforms has helped make stock trading more accessible to investors in the country.

Many platforms for stocks trading allow Nigerians to invest in open positions on the performance of tech names such as Google, Amazon, Tesla, Alibaba, and Intel. On dates when a stock company’s financial reports are announced, these platforms and brokerages offer an increase in margin to protect clients from the possible market
price gaps that usually occur following the announcements. Leading brokerage Exness limits their leverage to 1:5 for six hours before market closing until 20 minutes after the market opening for the affected stock. This helps protect investors from possible market price gaps, ensuring their investments aren’t vulnerable to sudden changes in
the market. Thus, digital trading platforms and brokerages can increase trader confidence.

Demand for investor protection

As the Nigerian Exchange (NGX) faces upward movement in investment values and market caps over the past weeks, traders in the country continue to face challenges regarding investors’ protection to help boost assurance in the market. This concern roots in numerous companies seeking to delist from the NGX capital market. For
example, energy company Oando disclosed its plans to delist from the NGX after releasing its report for 2021 to re-register as a private company.

With companies leaving the exchange, investors and traders are forced into selling their shares after not receiving paid dividends. According to the NGX website, tens of companies have been delisted in the last decade for reasons ranging from voluntary delisting, merger with another company, or regulatory reasons. This causes constant
doubt and uncertainty for those looking to invest in the Nigerian stock market. Calls for regulators to improve their regulatory functions are being made to protect investors better.

Lack of younger investors

Finally, there is a growing concern among stakeholders and experts on the future of the Nigerian stock market. Currently, the market is faced with a lack of interest from millennial investors who tend to prefer alternative investment options in micro-finance, fintech, and cryptocurrencies. As a result, stakeholders fear losing market
patronage as older-generation investors — thus far the largest segment of investors in the country — exit the market.

On the bright side, however, technological developments have led to the rise of mobile trading platforms, leading to an uptick in retail trading volumes on the Nigerian Stock Exchange (NSE). While this is yet to appeal to younger Nigerians, several foreign investors see Nigeria’s potential and are betting on its growth. For example, these foreign investors make up some of the largest shareholders of Nigeria’s
financial service provider Zenith’s Bank.

As such, we can see how technology and digital development support Nigeria’s stock trading industry. However, participation from younger investors and overall industry recovery hinge on additional protection for individuals.