How to Buy Global Stocks in Nigeria

How to Buy Global Stocks in Nigeria

How to Invest in Global Stocks from Nigeria

Truly and truly, the world is becoming a global village and the stock market is not left out of this globalization. The global financial markets offer a host of opportunities for Nigerians who want to grow their wealth and diversify away from the local market. It used to be a hard thing, but now, investing in the global, especially global stocks in Nigeria is as easy as downloading a mobile app.

In this article, we are going to delve into how to invest in the global markets, whether you’re a beginner looking to dip your toes into international investments or an experienced trader seeking to diversify your portfolio. We will touch on how to unlock the potential of global investments and navigate the complexities of the global financial markets.

Understanding Global Markets 

Just like the local market here in Nigeria, the global financial markets encompass a vast collection of financial instruments, including stocks, bonds, commodities, and currencies, all of which are traded on various exchanges around the world. The key to successful global investing is to grasp the fundamentals and dynamics of each of these markets. Here is an overview of what the global financial market is made of. 

Stock Markets

The stock market is one of the most popular constituents of the global financial markets, as it allows you to gain ownership of some of the most incredible companies in the world. Investing in global stock markets allows you to own a share of companies from different countries.

You can own shares in Apple, Amazon, Tesla, Alibaba, and a host of other successful companies. Some of the world’s largest stock exchanges include the New York Stock Exchange (NYSE), the London Stock Exchange (LSE), and the Tokyo Stock Exchange (TSE).

Let’s take a closer look at some notable stock exchanges and why they’re significant: 

New York Stock Exchange (NYSE)

This iconic exchange, based in New York City, is a powerhouse. It’s where some of the biggest American and international companies are listed. The NYSE is known for its strict rules and is a symbol of stability in the financial world. 

Nasdaq Stock Market

Also based in NYC, Nasdaq is where you’ll find many tech giants like Apple and Amazon. It’s famous for its electronic trading system and attracts innovative and high-growth companies. 

London Stock Exchange (LSE)

In London, the LSE is a major player in Europe. It is where international companies go to raise capital, offering a diverse range of stocks. 

Tokyo Stock Exchange (TSE)

Japan’s TSE is the largest stock exchange in Asia and one of the oldest globally. It’s home to some of Japan’s most prominent corporations. 

Hong Kong Stock Exchange (HKEX)

Based in Hong Kong, this exchange serves as a gateway for international investors looking to access Chinese companies, making it a significant player in global finance. 

Shanghai Stock Exchange (SSE)

As one of China’s primary stock exchanges, SSE plays a crucial role in the country’s economic growth, hosting many domestic companies. 

Frankfurt Stock Exchange (FWB)

Germany’s FWB is the largest stock exchange in the country and one of the most influential in Europe, hosting numerous global corporations. 

Toronto Stock Exchange (TSX)

In Canada, the TSX is the largest stock exchange, featuring companies from various sectors, including natural resources, technology, and finance. It’s a gateway for North American and international investors. 

Bond Markets

The bonds market is the largest constituent of the global financial market. Bonds are debt securities issued by governments and corporations. They offer a fixed income and are relatively lower risk compared to stocks.

Global bond markets provide opportunities for stable returns. For instance, you can invest in the bonds of the American government, or in a corporate bond such as the bonds of APPLE Inc. if issued. 

Commodities

Investing in commodities like gold, oil, and agricultural products can be a hedge against inflation and market volatility. The global commodities market is very extensive and diverse. 

Foreign Exchange (Forex)

Forex trading involves the exchange of currencies, making it the largest and most liquid financial market globally. It’s essential for international investors to understand currency exchange rates.

Why Invest in Global Stocks 

Diversification 

Diversifying your investments across different geographic locations helps to spread risk. For more context, investing solely in the Nigerian market exposes you to local economic and political factors that can lead to volatility. By diversifying globally, you reduce the impact of adverse events in any single market on your overall portfolio. 

Access to Global Brands 

The international financial market provides access to some of the world’s most renowned and successful companies, which is typically not available on the Nigerian stock exchange. Investing in these global giants can offer exposure to industries and technologies that are driving growth globally. Now, let’s shine a light on some real global heavyweights and why they’re good to have in your investment portfolio. 

  1. Microsoft Corporation (MSFT): Microsoft is a leader in the software industry, with products like Windows, Office, and Azure. Its diverse product portfolio and strong market presence make it a valuable addition. 
  1. Amazon.com Inc. (AMZN): Amazon dominates e-commerce and cloud computing with Amazon Web Services (AWS). Its continued expansion into various industries makes it an attractive choice. If you had invested in Amazon IPO, this investment would have returned 650% for you since the IPO. 
  1. Facebook (Meta Platforms, Inc.) (FB): As a global social media and technology company, Meta Platforms (formerly Facebook) remains a major player in the digital advertising and social networking space. Facebook has returned 687% since its 2012 IPO.

Higher Yield Potential

Some international mega, middle and even small-cap stocks may offer higher growth potential compared to the Nigerian market. For instance, the South African and Egyptian economy have grown at a faster pace than the Nigerian economy. 

Currency Diversification

Holding assets denominated in different currencies can act as a hedge against currency depreciation. This is particularly relevant for Nigerians given the fluctuation in the value of the Naira. Investing in assets denominated in stronger currencies can help preserve your purchasing power. 

Global Economic Trends 

By investing globally, you can align your investments with global economic trends. For example, if you believe that a particular sector or industry is poised for growth, you can invest in companies in that sector regardless of their location. One of such is the AI industry. The Nigerian exchange does not currently have an AIl-listed entity. Moreso, the country’s AI sector is still very nascent. Thus, looking beyond the shores of Nigeria for investing will afford you the opportunity to capture the AI frenzy and get exposed to a fast-growing industry. 

Liquidity and Accessibility  

Many global markets are highly liquid and accessible, offering a wide range of financial instruments. This liquidity can make it easier to buy and sell assets when needed, ensuring you can manage your investments efficiently. 

Risks Associated with Global Investing 

Investing in the global market as a Nigerian can offer significant opportunities for diversification and potentially higher returns, but it also comes with its fair share of risks. Here are some key risks to be aware of. 

Geopolitical Risks

Global events such as conflicts, trade disputes, or natural disasters can disrupt international markets and impact your investments negatively. 

Information Asymmetry

As a Nigerian investor, you may have limited access to information and research on foreign companies and markets, putting you at a disadvantage compared to local investors. 

Time Zone Differences

Monitoring and trading in global markets may require you to stay awake during odd hours due to time zone differences, which can be inconvenient and affect your decision-making. 

Liquidity Risk

Some foreign markets may have lower liquidity than Nigerian markets, making it harder to buy or sell assets at desired prices. This can lead to higher transaction costs and potentially unfavorable trade executions. 

Political and Economic Stability

Political instability and economic volatility in both Nigeria and the countries you invest in can impact your investments. Changes in government policies, trade tensions, or economic crises can lead to sudden losses. 

Currency Exchange Risk

When you invest in foreign assets, you’re exposed to fluctuations in exchange rates. A weakening of the Nigerian Naira against other currencies can erode your returns when converting profits back to Naira. 

Apps To Access Global Stock Markets

Thankfully, accessing the global market has gotten much easier. Before now, you’d have had to open a brokerage account with an international broker and this process is usually not as easy and straightforward because of frictions in laws and policies. Also, finding an international broker was another huge challenge.

However, thanks to technology the global market is now at your fingertips, as there are now digital platforms that provide access to the international financial markets. 

Here are the top platforms Nigerians can conveniently use to access the global financial market. 

Bamboo

Invest in US stocks from Nigeria - Bamboo

Bamboo enables Nigerian investors to purchase and own shares of international companies listed on stock exchanges such as the New York Stock Exchange (NYSE) and the NASDAQ. The platform also enables you to earn fixed-income returns, through its fixed-income investments. 

Coverage 

Bamboo only gives access to the US Market 

Fees 

See below the fees Bamboo charges for using its platform. 

S/N Product feature Minimum amount Fees 
Stock-market investing $1 Deposit-charges Naira card- 1.4% Naira bank transfer- ₦100  USD Card- 2-9% on total amount deposited  Trading fees 1.5% commission on trade   
2  Fixed-Income Investing $10 Deposit-charges Naira card- 1.4% Naira bank transfer- ₦100  USD Card- 2-9% on total amount deposited  No trading fees applicable 

Chaka 

Invest in US stocks from Nigeria - Chaka

Chaka enables Nigerians to invest in a wide range of global assets, including stocks, exchange-traded funds (ETFs), and American Depositary Receipts (ADRs). This access allows investors to own shares in well-known companies listed on international stock exchanges, such as the New York Stock Exchange (NYSE) and NASDAQ.

Coverage 

Chaka gives you access to the US and Nigerian financial markets. 

Fees 

See below Chaka’s Fee Structure 

Product Feature Trading fees 
Stock Trading 0 – $200 1.5% $200 – $1,000 1% $1,000 – $10,000 0.85% $10,000 – $50,000 0.75% $50,000+ 0.69%  

Trove

Invest in US stocks from Nigeria - Trove

Trove Finance is a fintech platform that has been making significant strides in the African investment landscape by providing easy and convenient access to a wide range of investment opportunities, including stocks, ETFs, and bonds. Troves service also comes with advisory, where they give you stock picks and trade strategies. 

Coverage 

Trove offers access to the Nigerian, Chinese, and US stock markets. 

Fees  

Unlike other platforms, Trove charges a monthly fee. 

S/n Fees 
Standard plan: Paper Trading Investment Recommendations World Class Research Powered by Morningstar Buy Sell Hold Ratings Trove Investor Education Portal Trove Debit Card $3/monthly 
Plus plan: Analyst Research Reports Technical Insight Fundamental Insight Daily Trade Ideas delivered straight to your inbox Stock Screener $5/monthly 

RiseVest 

Invest in US stocks from Nigeria - Risevest

RiseVest offers a straightforward solution for Nigerians looking to invest in global financial markets. The platform provides access to a diversified portfolio of U.S.-based assets, including stocks and bonds. This enables users to participate in the growth of some of the world’s largest companies and tap into the stability of the U.S. bond market.

Coverage 

RiseVest gives you access to the US Stock Market. 

Fees 

Because RiseVest functions more as an asset manager, they charge 1.5-2% depending on the amount of assets under management. 

Alternative Access to The Global Financial Markets 

There are several other ways Nigerians can access the global financial markets beyond online investment platforms. Here are some alternative methods: 

International Stock Trading Apps

Popular examples are eToro, IC Markets, etc

International Brokerage Accounts

You can open an international brokerage account with a reputable global brokerage firm that allows Nigerian residents to invest in foreign markets. These accounts often provide access to a wide range of investment options, including stocks, bonds, ETFs, and mutual funds. 

Global Investment Funds

Some Nigerian financial institutions and investment firms offer global investment funds that allow you to pool your money with other investors to access international markets. These funds are managed by professionals who make investment decisions on your behalf. Some examples of these funds are the United Capital Dollar Fund and the Chapel Hill Dollar Fund.

Choosing the right broker or platform 

Choosing the right broker or platform for investing in the global markets is a critical decision that can significantly impact your investment experience. Here are some steps to help you make an informed choice: 

Regulation and Licensing 

Ensure the broker or platform you intend to use is regulated and licensed by a reputable financial authority in its home country. For instance, the US SEC regulates the US Stock market. So, you’d typically want to keep an eye on this. This provides a level of protection for your investments. The top brokers talked about in this article are all vetted for licenses with the regulatory authority in the country of which they operate in. 

Trading Fees and Commissions 

It is important to evaluate the fee structure, including trading commissions, spreads, and other charges, as this can have an impact on your overall investment return. Look for brokers with competitive and transparent fee schedules. 

Minimum Deposit Requirements 

Determine if the broker has minimum deposit requirements that align with your available capital. Some brokers have low or no minimum deposit requirements. 

Currency Support 

Ensure that the broker/platform supports the currencies you plan to trade in, as currency conversion fees can add up and also affect your overall cost of trading. 

Trading Tools and Resources 

Assess the quality of the trading platform and the availability of research tools, market analysis, and educational resources. 

Customer Support 

Test the responsiveness and effectiveness of customer support. You may need assistance with account-related issues or technical problems.

Security and Account Protection 

Investigate the broker’s security measures, including encryption, two-factor authentication, and fund protection mechanisms. This is particularly true for online trading platforms.  It is very important for one to understand how your investments are insured or safeguarded. This helps to mitigate internet fraud and loss of funds.

Withdrawal and Deposit Methods 

Check the availability of withdrawal and deposit methods, including bank transfers, credit cards, and e-wallets. Ensure they are easy to use and cost-effective for you.

User Reviews and Reputation 

Research online reviews and testimonials from other users to get a sense of the broker’s reputation and reliability. 

Regulatory Compliance in Nigeria 

Make sure the broker or platform complies with Nigerian regulations regarding forex trading and international investments. Verify their registration with Nigerian authorities if required. 

Demo Account 

Many brokers offer demo accounts that allow you to practice trading with virtual funds. This can help you test the waters, and assess the platform’s usability and features before committing real capital.

Trading Platform Compatibility 

Ensure the broker’s trading platform is compatible with your devices and operating systems, including mobile trading apps if you intend to trade on the go. 

Trading Hours and Time Zones 

Consider how the broker’s trading hours align with your schedule and time zone. This is especially important for markets that operate during specific hours. 

Recommendations and Referrals 

You can seek recommendations from trusted friends, family members, or financial advisors who have experience with global investing. 

How to Know What to Invest in 

Before taking on any investments, especially in the global market which usually consists of terrains you are not familiar with. The most important thing to do is research! Here’s a step-by-step guide to help you make informed investment decisions: 

Set Clear Investment Goals 

Begin by defining your investment objectives. Are you investing for long-term wealth accumulation, retirement, education, or a specific financial goal? Your goals will influence your investment choices. 

Assess Your Risk Appetite

The second step is to understand your risk tolerance, which is your ability and willingness to withstand fluctuations in the value of your investments. Consider factors like your age, financial situation, and comfort level with risk.  

Understand Asset Classes 

Familiarize yourself with the various asset classes, which include stocks, bonds, real estate, commodities, and alternative investments. Each asset class has different risk-return profiles. 

Diversification Strategy 

Diversification involves spreading your investments across different asset classes and regions to reduce risk. Decide on your diversification strategy based on your risk tolerance and goals. You may want to diversify across countries such as the US and the UK or diversify across asset classes such as bonds or equity.

Research on Global Markets 

Research international markets to identify regions or countries that align with your investment objectives. Look for countries with stable economies and regulatory environments. 

Select Investment Vehicles 

Choose the investment vehicles that best suit your goals and risk tolerance. Options may include individual stocks, bonds, ETFs, mutual funds, real estate, or international investment funds. 

Currency Considerations 

Be aware of currency exchange rates and their impact on your investments. Decide whether to hedge against currency risk or take an unhedged approach. 

Risk Management 

Implement risk management strategies such as stop-loss orders or setting limits on the proportion of your portfolio allocated to a single asset or region. 

Education and Research 

Continuously educate yourself about global markets, investment strategies, and specific assets or sectors you’re interested in. Stay informed about global economic and geopolitical events that can affect your investments. 

Consult with Industry Professionals 

Consider seeking advice from financial advisors, investment managers, or experts with experience in global investing. They can provide personalized guidance based on your unique financial situation. 

Start Small and Build up Gradually 

Begin with a small portion of your capital and gradually increase your exposure as you gain confidence and experience in global investing. 

Monitor and Review Your Portfolio 

Regularly review your investments to ensure they align with your goals and risk tolerance. Adjust your portfolio as needed in response to changing market conditions or life events. 

Be Wary of Taxes 

Be aware of the tax implications of your global investments, including any reporting requirements and potential tax liabilities in Nigeria and the countries where you invest. 

Stay Disciplined 

Emotions can influence investment decisions. Maintain a disciplined approach and avoid making impulsive changes to your portfolio based on short-term market fluctuations. 

Stay Informed 

Subscribe to financial news sources, follow market trends, and consider joining investment forums or communities to stay connected with other global investors. Start by subscribing to Vennroad’s Daily Big Ideas. 

Taxes on stock trading in Nigeria? 

In Nigeria, gains generated from stock trading and other forms of investment fall under the category of Capital Gains Tax. Typically, any earnings derived from selling stocks are subject to taxation at a rate of either 0% or 10%, depending on whether you held the shares for over a year, or at your regular tax rate if the shares were held for one year or less. Nigerian traders do not encounter any specific tax deductions, but it is essential for all citizens to complete and submit their annual Personal Income Tax Return. 

Final Thoughts 

Investing in international financial markets has become easy thanks to the Internet. The global market offers us the opportunity to tap into the growth of big global brands However, It is important to keep in mind that investing in global investing comes with its own risks that may strongly differ from your local market. Therefore, it is important to conduct thorough research, diversify your investments, and consider seeking advice from investment professionals to make informed decisions that align with your financial goals and risk tolerance.

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