equity market
Equity Market is the whole marketplace, physical and digital, where shares of companies are bought and sold, letting ordinary people own a slice of a business.
In plain English
On Sunday afternoon at the family house in Ikeja, Uncle Ade always brings up the same topic after rice and stew. He wants to know why his neighbour's daughter, a twenty six year old banker, keeps talking about buying MTN and Dangote Cement shares instead of just saving in a fixed deposit like everybody else did in his own generation.
Someone finally explains it to him properly. The equity market is simply the space where people like that young banker can buy a small piece of a big company. Not the whole company, just a slice, called a share. When she buys MTN shares on the Nigerian Exchange, she becomes a tiny co owner of MTN, and if the company does well, her slice grows in value or pays her a share of the profit.
It helps to think of the equity market as a very large, very organised market square. Instead of tomatoes and pepper, the goods on sale are ownership stakes in companies. Some stalls, like the Nigerian Exchange in Lagos, deal in shares of Nigerian companies such as GTCO, Zenith Bank and Nestlé Nigeria. Other stalls, like the London Stock Exchange, deal in shares of companies such as Unilever or BP, and someone in Peckham sending money home might also be calmly building a small share portfolio there for the future.
The price of any share in this market moves up and down all day, based on how many people want to buy versus how many want to sell, and on how well the company is doing or is expected to do. That is the heartbeat of the whole market, buyers and sellers meeting somewhere in the middle.
Uncle Ade still prefers his fixed deposit, and that is fine, everybody's comfort level is different. But now he at least understands why his neighbour's daughter checks share prices the way he checks football scores.
A Nigerian investor buys 500 units of Zenith Bank shares at ₦45 per share on the Nigerian Exchange, spending ₦22,500. Six months later, the price rises to ₦58 per share, so her holding is now worth ₦29,000, a gain of ₦6,500 before any charges or tax.
Questions people ask
Is the equity market the same thing as the stock market?
Yes, the two names are used interchangeably. Equity market emphasises that what is being traded is equity, meaning ownership, while stock market is just the more common everyday name for the same place.
Do I need a lot of money to enter the equity market in Nigeria?
No. Many Nigerian stockbrokers and investment apps allow you to start with a few thousand naira, buying whatever number of shares that amount can afford at the current market price.
What is the difference between the equity market and the bond market?
In the equity market you buy ownership in a company and your returns depend on how the business performs. In the bond market you are lending money to a company or government and expecting fixed interest back, with less ownership risk involved.
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