Many people say “the stock market” as if it’s just one place.
In reality, there are different types of stock markets, each serving a unique purpose.
Understanding this will help you invest smarter, manage risk better, and avoid costly mistakes.
🏛️ 1. Primary Market (Where Shares Are First Sold)
This is where companies raise money directly from the public.
Examples:
• Initial Public Offer (IPO): When a company sells its shares to the public for the first time to become a publicly listed company. For example, Dangote Oil Refinery is expected to be listed this year, likely in April.
• Public Offer (PO): When an already listed company sells additional shares to the general public to raise more capital. TIP had recently closed its PO, 2 weeks ago, selling a share at 9.5 naira. The share price has closed today at 15 naira, i.e., about 58% discount for those who bought it.
• Rights Issue (RI): When a company offers EXISTING shareholders the right to buy more shares at a discounted price in proportion to what they already own before a given qualification date. FIDSON has a right issue that closes at the end of this month. A share via the RI is 35 naira, but closed today at about 70 naira, i.e., about 50% instant discount for any eligible shareholder on the register of the qualification date (12 November 2025).
• Private Placement: When a company sells shares to a selected group of investors (new investors, institutional investors, high-net-worth individuals, strategic partners) to raise capital. Many banks (UBA, FIRST BANK, etc.) used this method to raise their capital and meet the new CBN bank recapitalization.
Here, you buy shares directly from the company, often at a discounted price.
🔑 What to know:
• Great entry point applicable to IPO and Private Placement
• Prices are fixed for the duration of the offer
• Good for long-term investors
📊 2. Secondary Market (Where Shares Are Traded Daily)
This is the regular stock market where investors buy and sell shares among themselves.
Examples:
• Nigerian Exchange (NGX)
• NASD OTC Market
• Newyork Stock Exchange (NYSE), USA
• London Stock Exchange (LSE)
Prices move up and down daily based on demand, company performance, and economic news.
🔑 What to know:
• Prices are dynamic
• You can profit or lose
• Research matters
🇳🇬 3. NGX vs NASD OTC (Nigeria’s Two Main Markets)
NGX (Nigerian Exchange)
It is the only market for all publicly LISTED companies like:
BUA FOODS, Jaiz Bank, GTCO, Dangote Cement, etc.
There are 143 companies currently whose total value of all shares, i.e., market capitalization (cap), stands at 106 trillion naira, monitored using the all-share-index or NGXASI. Market cap is the primary way investors categorize companies by size, such as large-cap (stable, established, e.g., MTN, BUA FOODS, Seplat), mid-cap (growth-oriented, e.g., FIDSON, Julius Berger, PZ, Jaiz Bank), or small-cap (high potential but volatile, e.g., NCR, Eunisell, Deap Capital Management).
• Highly regulated
• Very liquid (with variation from one company to another)
• Transparent
NASD OTC Market
NASD OTC stands for the National Association of Securities Dealers Over-the-Counter. Think of NASD OTC as a “waiting room” or alternative market for companies that are public but not yet ready, willing, or eligible to list on the NGX—yet investors can still buy and sell their shares in an organized, regulated way. There are about 45 companies with a total market cap of 2.2 trillion naira, monitored using the securities index or NASDSI.
For UNLISTED PUBLIC companies like:
MTN Nigeria (before listing), MRS Oil Nigeria Plc, Access Bank Plc, etc. All companies have a suffix, PLC.
• Less liquid
• Some delisted companies from NGX
• Companies preparing for future NGX listing
• Special purpose or restructuring entities
• You must go through a licensed stockbroker. Some brokers give you access to both NGX and NASD OTC stocks.
Compared to NGX:
• Easier and cheaper to join
• Less stringent disclosure rules
• Attractive to mid-sized or transitioning companies
🌍 4. Global Stock Markets
You can also invest in:
• U.S. Stocks
• European Stocks
• Asian Markets
• Saudi Arabian stocks (from 1 February 2026 if you are a non-resident)
While international markets often command the spotlight, the Nigerian Exchange (NGX) has quietly emerged as a premier destination for high-yield returns. Last year, the NGX delivered a staggering 51% return—vastly outperforming the US market’s 17% and securing its position as the second-best performing market in Africa. For the Diaspora, Nigeria represents a frontier of untapped potential. We are seeing a global shift; for the first time in US history, equity investments have surpassed real estate in popularity. While the allure of property in Lagos and Abuja is undeniable, those who master the art of stock selection could find that the capital markets offer a superior vehicle for wealth creation.
Using apps like:
Bamboo, Trove, Chaka, etc.
🔑 What to know:
• Dollar exposure
• Global diversification
• FX risk involved
📌 What Every Beginner Must Know
Before investing, always ask:
✔ Which market am I entering?
✔ Is it short-term or long-term?
✔ How liquid is this market?
✔ What risks are involved?
✔ Do I understand this company?
The market type determines:
• Your risk level
• Your strategy
• Your patience requirement
• Your expected returns
🎯 Final Thought
There isn’t just one stock market.
There are different markets for different goals.
Smart investors don’t just buy shares —
They understand where, why, and how they are investing.
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