NGX warns against speculative trading, urges focus on fundamentals

NGX warns against speculative trading, urges focus on fundamentals

NGX Regulation Limited (NGX RegCo) has issued a firm advisory to the investing public, warning against the dangers of speculative trading and urging market participants to base their investment decisions on company fundamentals rather than unverified information.

NGX

In a statement released on Wednesday in Lagos, NGX RegCo, the independent regulatory arm of the Nigerian Exchange Group, addressed notable price movements observed in the shares of certain listed companies over recent trading sessions.

The Exchange clarified that the advisory is part of its standard market surveillance functions, designed to ensure a fair, orderly, and transparent market.

In the statement, the CEO of NGX Regulation Limited, Olufemi Shobanjo, said, “Our primary responsibility is to maintain a level playing field where market participants can trade with confidence, backed by timely and accurate information.

“This advisory is a routine communication, reinforcing that sound fundamentals, not speculation, remain the foundation for sustainable investment outcomes. We are fully committed to preserving the integrity and stability of our market.”

The regulator encouraged investors to prioritise informed and disciplined decision-making by relying on publicly available information. This includes conducting a thorough assessment of company fundamentals, financial performance, and risk profiles.

NGX RegCo also advised investors to exercise due diligence and avoid trading based on rumours or unverified tips. Where necessary, the regulator recommends consulting licensed intermediaries such as stockbrokers or investment advisers to guide investment choices.

Reassuring the public, the NGX emphasised that despite the recent volatility in specific stocks, the broader market remains stable and resilient.

“NGX RegCo reassures all stakeholders that Nigerian Exchange remains stable, well-regulated, and resilient,” the statement read.

“The Exchange continues to foster an environment where investors can participate with confidence, supported by robust oversight and transparent market operations,” it added.

The advisory serves as a measured reminder for investors to look beyond short-term price spikes and focus on the long-term value drivers of the companies in which they invest.

Recently, there has been a significant surge in the share prices of tier-one and tier-two Nigerian banks. This rally is often fueled by year-end positioning, attractive valuations, and dividend expectations.

NGX RegCo uses sophisticated technology to monitor trading patterns in real-time. When a stock experiences a price movement that exceeds predefined statistical thresholds, such as a 10% or 20% change without a corresponding corporate announcement, it triggers an alert.