COVID-19 Stock Market Experiences and Local Investors’ Investment Decisions in Lagos, Nigeria: A Pilot Study

Abstract

Economic activities were yet to pick up following the devastating effects of Covid-19 pandemic on stock market in Nigeria. Major cities were on complete lockdown for months leading to another phase of stock market crisis in 2021. This study explored Covid-19 stock market experiences and local investors’ investment decisions in Lagos, Nigeria. Organic theory of Emile Durkheim was adopted as framework, whereas exploratory design was employed. The study utilized purposive and snowballing sampling techniques, using purely qualitative research instruments with a sample of fifty-three (53) interviewees. Forty In-depth interviews (IDI), four Case Studies and nine Key informants (KII), three each were purposively selected from staff of Nigerian Exchange Ltd (NGX), Securities and Exchange Commission (SEC) and Stockbrokers in Lagos State based on their in-depth professional knowledge about stock market operations. The qualitative data were content analyzed. The result of the study showed that local investors’ Covid-19 stock market experiences have greatly affected their present investment decisions, hence local investors’ investment apathy currently affecting the Nigerian stock market. There is need for restoration of investors’ confidence in the Nigerian stock market.

Full text

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COVID-19 Stock Market Experiences and Local
Investors’ Investment Decisions in Lagos, Nigeria: A
Pilot Study
Iheanyi Valentine Ekechukwu (  vi.ekechukwu@unizik.edu.ng )
Nnamdi Azikiwe University Faculty of Social Sciences https://orcid.org/0000-0002-9877-3233
Ojima Samuel Adejoh
University of Lagos Faculty of Social Sciences
Chinedu Ernest Dinne
University of Ibadan Faculty of Social Sciences
Joseph N Nwogu
University of Ibadan Faculty of Social Sciences
Research Article
Keywords: Covid-19, Experiences, Investment decisions, Local investors, Stock market
Posted Date: October 3rd, 2022
DOI: https://doi.org/10.21203/rs.3.rs-1937416/v2
License:   This work is licensed under a Creative Commons Attribution 4.0 International License. 
Read Full License

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Abstract
Economic activities were yet to pick up following the devastating effects of Covid-19 pandemic on stock
market in Nigeria. Major cities were on complete lockdown for months leading to another phase of stock
market crisis in 2021. This study explored Covid-19 stock market experiences and local investors’
investment decisions in Lagos, Nigeria. Organic theory of Emile Durkheim was adopted as framework,
whereas exploratory design was employed. The study utilized purposive and snowballing sampling
techniques, using purely qualitative research instruments with a sample of fty-three (53) interviewees.
Forty In-depth interviews (IDI), four Case Studies and nine Key informants (KII), three each were
purposively selected from staff of Nigerian Exchange Ltd (NGX), Securities and Exchange Commission
(SEC) and Stockbrokers in Lagos State based on their in-depth professional knowledge about stock
market operations. The qualitative data were content analyzed. The result of the study showed that local
investors’ Covid-19 stock market experiences have greatly affected their present investment decisions,
hence local investors’ investment apathy currently affecting the Nigerian stock market. There is need for
restoration of investors’ condence in the Nigerian stock market.
Introduction
Covid-19 pandemic outbreak has great consequences on global nancial markets (Hassan and
Gavilanes, 2021). It led to an unenthusiastic upset of universal economies (Harjoto, Rossi and Paglia,
2021). Stock markets were the rst to respond, with daily decline in prices of shares similar to the global
nancial markets crisis of 2008 (Hassan and Gavilanes, 2021). The effects of the pandemic have been
the greatest in Asia emerging markets, while Europe emerging markets have witnessed the least (Topcu
and Gulal, 2020). Covid-19 pandemic caused investment apathy experienced in stock markets globally.
Many investors turned to investments in gold markets which always act as investment succour during
nancial markets crisis. Also, the pandemic and its inherent lockdown led to increased internet activities
and investments in crypto currencies were embraced as alternative investment option for investors (Zeren
and Hizarci, 2020).
Sequel to the aftermath of Covid-19 pandemic which hit Nigeria in 2020, economic activities are yet to
pick up following its devastating effects on the economy, of which the Nigerian stock market is an
integral part. Major cities were on complete lockdown for months leading to another phase of stock
market crisis in Nigeria. The Nigerian stock market crisis of 2021 has multiplier effects on local investors
just like the universal stock market crisis of 2008. The effects of 2021 stock market crisis were
unprecedented as Foreign Portfolio Investment (FPI) inows declined to 189.42 billion naira
(Adamolekun, 2022 and Ochu et al., 2022).
The Nigerian stock market capitalization declined to N13.136 trillion and investors’ losses as at June
2020 were estimated at N16.88 billion. All Share Index (ASI) dropped to 12.85% from 26,415.54 basis
points on February 27 2020 to 23,021.01 basis points on April 30 2020 (Raifu, Kumeka and Aminu,
2021).

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Nigerian stock market underperformed in 2021 as a result of 2020 Covid-19 pandemic lockdown (Ayodeji,
2022). The mayhem in the Nigerian stock market has not stopped scarring local investors away. The
exceptional losses local investors recorded in 2008 up to 2021 left them frustrated. Economic activities
and social life were distorted which resulted to loss of lives and means of livelihood. Also, export revenue
losses were immeasurable while nancial sector lost about nine trillion US dollar. Tourism and hospitality
industries suffered the greatest upheaval as a result of Covid-19 lockdown. Unemployment in both formal
and informal sectors increased greatly, leading to another phase of economic recession (Raifu, Kumeka
and Aminu, 2021).
Investors were yet to recover from losses they recorded during various stock market crises in Nigeria,
leading to incessant decline in condence and reduction in stock market investment. Although most of
the foreign investors exited the Nigerian stock market as a result of economic, political and security
reasons, foreign investments have continuously dominated transactions on the trading oor of Nigerian
Exchange Limited (NGX) until early 2020.
Previous studies on Covid-19 pandemic focused on the economic effects, public risk perception, Nigerian
Exchange Ltd (NGX) performance, impact on foreign investment, coping strategies and health
management (Al-Awadhi et al, 2020; Anh and Gan, 2020; Baker et al, 2020; Igwe, 2020; Khan et al, 2020;
Lee, 2020; Topcu and Gulal, 2020; Zeren and Hizarci, 2020; Harjoto, Rossi and Paglia, 2021; Hassan and
Gavilanes, 2021; Raifu, Kumeka and Aminu, 2021; Adamolekun, 2022 and Ochu et al, 2022). But a
negligible attention has been given to the inuence of Covid-19 pandemic on local investors. This study
explored Covid-19 stock market experiences and local investors’ investment decisions in Lagos, Nigeria.
Literature Review
Covid-19 pandemic has its origin in Wuham, China where it was rst detected on December 2019. The
rapid spread of the disease has global devastating effects on world economies. Many lives were lost as
most economic activities went into extinction following several months of being on lockdown (Ochu et al,
2020). No communicable pandemic outbreak has affected the stock market in the past like Covid-19.
Previous pandemics outbreak merely caused mild effects on the US stock market (Baker et al, 2020).
The world economies encountered the worst economic recession as a result of the outbreak of Covid-19
pandemic (Igwe, 2020). Nigeria being the giant of Africa earns larger chunk of her foreign exchange
through sale of crude oil. The crude oil price dropped drastically in April 2020 in the hit of global
lockdown orchestrated by Covid-19 pandemic. This created a renewed decline in foreign investors’
involvement in the Nigerian stock market leading to another wave Nigerian stock market crisis
(Adamolekun, 2022). The hope of the Nigerian stock market to recover from previous stock market crises
was dashed in 2021 following the after effects of 2020 Covid-19 pandemic where major cities were on
complete lockdown for months. Economic activities were paralyzed as foreign inows also declined
(Adamolekun, 2022).

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Nigeria’s conrmed cases have signicant impact on the Nigerian Stock Exchange’s (now Nigerian
Exchange Ltd NGX) All Share Index (ASI) (Sayanu, Isa and Lawan, 2020). This is factual because
foreign inows were not coming during the period under review. Their ndings also portrayed that
changes in the external cases and recorded deaths from US, China and Britain did not have signicant
impact on the NGX’s ASI.
Raifu, Kumeka and Aminu (2021) recommended for the relaxation of lockdown policy and combined use
of monetary and scal policies to alleviate the negative impact of Covid-19 pandemic in Nigerian stock
market. Among all developed countries that were bailed out as a result of Covid-19, it was only the US
stock market that witnessed positive returns on investment (Harjoto, Rossi and Paglia, 2021). The
ndings of Topcu and Gulal (2020) showed that governments’ intervention helped in offsetting the
impact of Covid-19 pandemic. The studies of Anh and Gan (2020) armed the adverse effects of the
daily increase in the number of conrmed cases of Covid-19 pandemic on stock market returns in
Vietnam.
Investors reacted negatively on stock market activities following the conrmation of human-to-human
transmission of Covid-19 virus (Khan et al, 2020). The ndings of Al-Awadhi et al (2020)) showed that
both total cases of death recorded as a result of Covid-19 pandemic and the daily increase in total
conrmed cases have signicant negative impact on stock market across every company.
A wide-ranging view of the early effects of Covid-19 pandemic sentiment on US stock market advocates
for calculated investment planning, taking into consideration further changes in the correlation stage of
time lag differences (Lee, 2020). The lockdown of economic activities during Covid-19 pandemic was the
major reason US stock market responded negatively to Covid-19 than previous pandemics (Baker et al,
2020).
Theoretical Framework
The study employed organic theory as popularized in the works of Emile Durkheim (1858 – 1917). Like
other scholars before and after his time, in a quest for the preconditions necessary for the attainment of
social order, a fundamental necessity in human society which can be intellectually associated to the
historic expression of Hobbesian problematique, that is, given the Hobbesian postulations that man is by
nature undomesticated
.
“How is social order possible (Ninalowo, 2004; 2007)”? Emile Durkheim emerged
the intellectual catalyst with his concepts of Mechanical Solidarity (MS) and the Organic Solidarity (OS)
in his classic sociological work entitled, “The Division of Labour in Society’,

published in 1893, in which
he provided a semblance of response to the Hobbesian problematique, and set what he perceived as the
preconditions necessary for the attainment of social order in human society. He also introduced the
concept of anomie simply put, lawlessness or the breakdown of the inuence of social norms on
individuals within a society (Durkheim, 1893).
Social integration and cohesion which emanate from homogeneity of individuals in the society is what
Emile Durkheim referred to as Mechanical Solidarity. The organic paradigm of Durkheim approaches the

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understanding of the society like an organism comprising of many interrelated and interdependent parts.
He believed that members of the society are organically connected to one amother through an internal
consciousness. This consciousness gives them, a sense of belonging and as such they try to keep the
generally accepted rules and mode of conduct in the society. In order words, this feeling of oneness and
attachment or support for one’s society is what he called “Social Solidarity (SS)”, a feeling of oneness
that is generally shared by members of a particular society. It is this feeling (Solidarity) that regulates
behaviour and make people act in a way that will be accepted by other members of the society (Jones,
1986).
It is on the basis of this that he identied two types of Solidarity, based on two types of societies, which
he christened Mechanical Solidarity and Organic Solidarity. Also, apart from conceptualizing individual’s
solidarity to the society, Durkheim theorized that modern societies have certain interconnections involving
social parts on the basis of differentiation and division of labour. Such interconnections among social
parts of institutions of the society is what has come to be known as the Organic Solidarity, which further
highlight the organic paradigm or model previously existing in sociology in the works of earlier scholars
like Auguste Comte (Duckheim, 1893).
As the organic paradigm of Durkheim approaches the understanding of the society like an organism
comprising of many interrelated and interdependent parts, the same is applicable to the economies of the
world and their stock markets as envisaged in the global lockdown and economic crisis of 2021
orchestrated by the outbreak of Covid-19 pandemic. The crash of global economies and stock markets
affected Nigerian stock market as Nigeria’s economy is interconnected and interdependent with the rest
of the world as postulated by Emile Durkheim in organic theory.
Aside that, the functions of Nigerian stock market participants like Registrars, Stock Broking Firms,
Issuing Houses, Investors, Securities and Exchange Commission (SEC), Nigerian Exchange Limited (NGX),
and Central Bank of Nigeria (CBN) are interrelated and interdependent. For instance, investors do present
their shares to their Stockbrokers for verication, Stockbrokers package same for verication and send to
Registrars, the Registrars in return verify the shares and lodge them electronically with the Central
Securities Clearing System Ltd for onward trading on the trading oor of the Nigerian Exchange Ltd
(NGX). After trading, the Central Bank of Nigeria makes the funds or proceeds available through
designated settlement banks. The funds were credited to the Stock broking rms’ bank accounts and at
this juncture, brokers issue their cheques to investors. But at present, as part of the her efforts to minimize
stock market frauds, the Nigerian Exchange Ltd (NGX) do credit investors directly from the exchange
without passing the funds to Stock broking rms’ bank accounts.
In the same manner, stock market participants have a well structured division of labour. Each organ of the
market performs its functions eciently and effectively in order to achieve a sustainable stock market.
The Registrars are saddled with the responsibility of maintaining register of members of shareholding,
printing and allotment of share certicates, dividend payment and verication of share certicates.
Stockbrokers on the other hand have the mandate of investors to buy and sell shares on their behalf.

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These mandates are made possible by the role played by other organs of the stock market. The Central
Securities Clearing System Ltd provides the shares to be traded electronically as perfected by the
Registrars. The Nigerian Exchange Ltd (NGX) provides and regulates the trading platform while the
Central Bank of Nigeria (CBN) clears the funds through the Settlement Banks (Ogogo, 2006).
From the aforementioned, it is a known fact that the organizers of the Nigerian stock market drew their
inferences from the organic theory of Emile Durkheim. Each organ of the stock market is interconnected
and interrelated as postulated by Emile Durkheim, they perform their specialized roles in conjunction with
one another, aimed towards the actualization of ecient and effective Nigerian stock market.  
Methods
The study adopted exploratory design in the course of exploring the inuence of Covid-19 stock market
experiences on local investors’ investment decisions in Lagos State, Nigeria. The study purely relied on
qualitative method of data collection. This became necessary because the nature of the study under
investigation required a design that gives room for closeness, especially in this case where most local
investors have exited stock market following the devastating effects of Covid-19 lockdown. Many people
were still working from homes following Covid-19 protocols and restrictions of movement. Also, most
businesses are now done online electronically.
The location adopted for the study was Lagos State, Nigeria. The choice of Lagos State became
inevitable due to the fact that it happens to be the only State in Nigeria that has full representatives of all
the stock market participants and at the same time the epicenter of economic activities in Nigeria. The
study population was streamlined to the Nigerian stock market operators, regulators and local investors.
Purposive and snowballing sampling techniques were adopted. Researchers chose only local investors,
stock market operators and regulators as they constituted the population of those that met the purpose
of the study.

The breakdown of the population was as follows:
Table 1 showing the sample size of fty-three (53) interviewees drawn from a population of those
involved in the buying and selling of shares, market regulators and local investors in Lagos State.       

Table 1

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󰁅 Sample size󰁅 %
Stock brokers (KII) 3 5.7%
Nigerian Exchange Ltd Staff (KII) 3 5.7%
Securities and Exchange Comm. Staff (KII) 3 5.7%
Local Investors (IDI) 40 75.5%
Case Study 4 7.5%
Total 53 100%
Data collection
Primary data:
Data from In-depth Interviews Case Studies and Key Informant Interviews were derived through
unstructured interview guides.

In-depth, Case Study and Key Informant interviews
In-depth interview (IDI) was used to obtain data from Forty (40) local investors who were interviewed
using snowballing approach. On the other hand, three (3) categories of Key informants were selected. The
rst category was Stockbrokers who by virtue of their positions as dealing members are involved in the
daily trading of equities on the trading oor of the Nigerian Exchange Ltd (NGX). The second category of
Key informants interviewed was management staff of the Nigerian Exchange Ltd, who provide and
maintain the platform for trading of equities, while the third one was management staff of Securities and
Exchange Commission who provide rules and regulations guiding the operations of the market. Three
persons were purposively selected from each group. Four Case Studies were purposively selected based
on their in-depth knowledge of stock market operations.

Secondary data
Secondary data collected were mainly from Nigerian Exchange Ltd (NGX) computerized library, and some
other libraries within and outside Lagos which include University of Lagos, and Lagos State University.
Other sources include journals and relevant articles.
Face to face method was used in the administration of the qualitative instrument in order to capture the
respondents’ mood and use of signs and symbols which have meanings in the parlance of interpretive
sociology as envisaged in Herbert Blumer’s symbolic interactionism.

Page 8/18

Method of data analysis
Forty (IDI) and four Case Studies were interviewed as local investors, whereas nine Key Informants
comprising of staff of Nigerian Exchange Ltd, Securities and Exchange Commission and the
Stockbrokers were also interviewed in Lagos State. Data from In-depth Interviews (IDI), Case Studies and
Key Informant Interviews (KII) were obtained through the use of recording gadget, which were later
transcribed by researchers for the purpose of data analysis. Data from qualitative instruments were
content analyzed.

Limitations
The study was a very sensitive one, especially on the side of the key informants who have been heavily
criticized over the state of affairs in the Nigerian stock market. To track local investors for interview posed
much problem, most of them have exited the stock market whereas others were still working from homes
due to Covid-19 pandemic restrictions, hence our resolve to rely on qualitative data.
Analysis
Covid-19 stock market experiences and local investors’ investment decisions
Local investors in the Nigerian stock market have been experiencing diculties as a result of the nancial
crisis orchestrated by the global spread of covid-19 pandemic in 2020, the stock market capitalization
declined toN13.136 trillionwithin six months,All Share Index (ASI) dropped to 12.85% from 26,415.54
basis points on February 27 2020 to 23,021.01 basis points on April 30 2020.Investors lost their life
savings, many homes were broken while some investors lost their lives as a result of heart failure. In the
light of all these, the study examined the inuence of Covid-19 stock market experiences on local
investors’ investment decisions in Lagos, Nigeria.
Most of the respondents when asked about their Covid-19 stock market experiences responded that they
were dealt with as far as investment in shares were concerned, they lamented that some lost over N19
million in a single transaction. They vowed not to invest again having lost such huge amount in a
twinkling of an eye as illustrated below:
I was dealt with when it comes to investment in shares, the recession really affected me. Imagine that I
bought ve million units of Universal Insurance plc shares at the rate of four naira per share and I sold
during the meltdown at fty kobo per share. I lost about N17 million in that transaction alone. I bought
some shares again in 2019 with the hope of recouping my losses and only for me to record another huge
loss as a result of global economic recession caused by Covid-19 pandemic. Major cities were on
lockdown for months which crippled economic activities. The disappointment was so much, I do not

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think I will like to go through that anymore. Even if the stock market becomes vibrant again, I have vowed
not to invest anymore and my decision is nal (IDI, civil servant, Lagos, 2022).

Another respondent reacted in a similar manner as follows:
I do not like remembering my Covid-19 experiences in the stock market, I lost money, if not the grace of
God, I would have lost my marriage. I was making prot initially, I later introduced my husband into the
whole thing. We had a common stockbroker who was coming on a weekly basis to pick up cheques from
us. My husband made a prot of two million naira in less than six months, and he was very happy. Later, I
encouraged him to sale our house in Lekki Phase 11 and invested the entire proceeds in the stock market
with the hope of buying three houses in Lekki after one year of speculative trading on the oor of the
exchange. Few weeks after investing the money, Nigeria recorded her rst Covid-19 case, followed by
lockdown and 2021 stock market crash. There is no amount of preaching that will make me go back to
stock market investment (IDI, Business woman, Lagos, 2022).

Case Study, Box 1: A businessman as a local investor
A 56 years old businessman who closed down his shop totally during the covid-19 lockdown lamented
what he passed through during the period. He stated that he had over 10 million naira worth of goods in
his shop, but his inability to open his shop and make sales affected his domestic obligations at the home
front. He even placed order to sell some shares, but the stock market was bearish with low demand for
shares. He queried the essence of investing in shares if one could not raise money from the stock market
when in need. The businessman has decided not to invest again in the stock market until the whole
situation normalizes.

The above Case Study in Box 1 aligned with the views of most local investors during the In-depth
interview sessions. Most of them have exited the stock market following the devastating effects of Covid-
19 pandemic on stock market in line with the impact created by the global lockdown of major cities. Khan
et al (2020) reported that investors responded negatively on stock market activities following the
conrmation of human-to-human transmission of Covid-19 virus. Also, Al-Awadhi et al (2020)) stated that
both total cases of death recorded as a result of Covid-19 pandemic and the daily increase in total
conrmed cases have signicant negative impact on stock market across the globe.
This global lockdown impacted negatively on the global economies of which Nigerian stock market is an
integral part as demonstrated by Emile Durkheim in Organic theory. Durkheim (1893) theorized that
societies are interconnected and interdependent on one another. However, the responses of few
interviewees contradicted this. One maintained that he sold off his shares before the 2021 stock market

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crash and made huge prot only for him to buy back during the market crisis at a highly reduced rate. He
asserted thus:
I sold off all my shares before the 2021 stock market crisis and I recorded high returns on my investment.
And I bought the shares back during the nancial crisis at a highly reduced rate when major cities were on
lockdown due to Covid-19 pandemic. Since then I have been making prot from the market. I know the
secret of investing in the Nigerian stock market, as investors are selling their shares, I will be buying and
when they are buying, I will be selling (IDI, Auditor, Lagos, 2022).

Case Study, Box 2: A female civil servant as a local investor
A 32 years old female civil servant stated that she was not affected during the lockdown. She maintained
that the government gave adequate notice for people to prepare themselves for the lockdown. The civil
servant bought enough food stuffs within the period as she was not lacking anything. Although she was
not going to work during the lockdown, but her salaries were paid regularly at the end of the month.
Instead of selling her shares during the lockdown, she rather acquired more shares at low prices. Her
covid-19 stock market experiences were rather rewarding.

The above Case Study in Box 2 contradicts the views of most participants who have exited the stock
market as a result of their Covid-19 stock market experiences. Aside Covid-19 stock market experiences,
some local investors have also lost condence on the regulatory bodies following the unjust treatment
meted on them when core foreign investor took over the management of Nigerian bottling company Plc.
Some respondents explained that how they were skimmed out in Nigerian bottling company Plc.
According to them, they have been shareholders of the company for the past ten year, and when the
management team told them in the Annual General Meeting (AGM) that a core foreign investor was
coming, they were all happy about that, but little did they know that they would be skimmed out. They
equally blamed Central Bank of Nigeria for churning out obnoxious policies that were detrimental to the
development of the stock market. They asserted thus:
I lost huge sum of money in the stock market, for now I am not investing anymore. Nigerian Bottling
Company (NBC) brought in core foreign investor, they paid the local investors off and delisted the shares
on the trading oor of the exchange, is it fair? When the management team informed us in the Annual
General Meeting (AGM) about the coming of a core foreign investor, we were all happy about that, but we
never knew that the so called core foreign investor was coming to take the company away from us. As
this was happening, Securities and Exchange Commission (SEC) approved the acquisition of the
company by a core foreign investor to the detriment of local investors who stood by the company all
these years (IDI, civil servant, Lagos 2022).


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Another respondent asserted thus:
I have lost condence in the Nigerian stock market, I invested over N2 million and I lost everything in the
2021 economic recession. The economic recession is not only the problem facing the stock market,
regulators’ short comings are also affecting the market. Securities and Exchange Commission (SEC) has
failed to protect the interest of the local investors, they are only interested in the welfare of foreign
investors (IDI, self-employed woman, Lagos, 2022).

Another respondent reacted this way:
Aside the after effects of Covid-19 pandemic, the Nigerian stock market has been suffering from
illiquidity caused by Central Bank of Nigeria monetary policy. Example, margin facilities are not viable
anymore. Before the stock market crisis, commercial banks used to give margin facilities to interested
investors and market operators to enable them play active role in the market through speculative trading.
Government cannot even persuade pension fund administrators to invest in the stock market, if they
cannot invest pension funds in the stock market, how then do you expect me as an ordinary individual to
invest my money in the stock market (IDI, Businessman, Lagos, 2022)?

Case Study, Box 3: A female supplier as a local investor
A 62 years old female supplier maintained that she had a bitter experience during the lockdown. She used
to supply goods to oces, and her business was affected since those oces were on lockdown. Few of
her shares she placed on sale could not be sold as a result of covid-19 lockdown. She resorted to
borrowing in order to feed her family, and her shares in the stock market lost tremendous value as she
was unable to sell and offset her indebtedness during the lockdown. She has decided to stay away from
stock market investment for now. 

The above Case Study in Box 3 corroborates the views of most participants. The lockdown affected
many businesses as demonstrated above. This is also in tandem with the works of Raifu, Kumeka and
Aminu (2021) who recommended for the relaxation of lockdown policy and combined use of monetary
and scal policies to alleviate the negative impact of Covid-19 pandemic in Nigerian stock market.
Some of the Key Informants blamed stockbrokers for not informing the local investors to hold on to their
shares during the economic recession. They lamented that local investors who were supposed to have
condence in the stock market equally joined foreign investors in the panic sale of shares on the trading
oor of the exchange. They equally blamed local investors for being greedy and self centered as they
called on regulators to compel all the companies that sold Private Placements to list their shares on the

Page 12/18
trading oor of the exchange in order to alleviate the sufferings of the investing public whose funds were
trapped since 2008. They argued as follows:
Stockbrokers are to be blamed for not educating the local investors appropriately during the 2021 stock
market crisis. The local investors were supposed to hold on to their shares until after the recession, rather
they joined foreign investors in the panic sale of shares and they succeeded in putting pressure in the
market which made prices of shares to be on bearish trend on daily basis. This is the reason why local
investors lost serious money. Most of them dumped their shares below market prices (KII, SEC Staff,
Lagos, 2022).

Another Key Informant asserted thus:
The world is a global village, what affects one country will surely affect the other, we expected it, Covid-19
pandemic affected many nations and the aftereffects on the economy led to 2021 Nigerian stock market
crisis. When local investors were making money from the market did they accuse anybody? Now that
they have lost money mainly as a result of Covid-19 pandemic and they are complaining (KII, NGX Staff,
Lagos, 2022).

Another Key Informant reacted this way:
I also lost money during the recession, but that does not mean that people are not making prot again in
the stock market. During the insurance company’s re-capitalization exercise, investors made good prot
through various private placements oated by insurance companies. But during 2008 and 2021 stock
market crises, insurance stocks were the most affected. Investors funds are trapped in these private
placements as most of the companies were unable to list the shares before the commencement of stock
market crises. Securities and Exchange Commission should compel those companies to list their shares
in order to alleviate the sufferings of the local investors whose funds are trapped since 2008 (KII,
Stockbroker, Lagos, 2022).

Another Key Informant maintained that local investors were yet to return to the market after stock market
crises of 2008 and 2021. He asserted thus:
In terms of condence, the domestic retail investors are yet to regain the boldness to return to the stock
market after the market crises of 2008 and 2021. There is also the perception that stock market is not
transparent and this has not been helped by the number of illiquid stocks on the trading oor of the
exchange as some investors are still looking for ways to sale off their holdings. But regulators have done
well in the course of restoring investors’ condence in the stock market (KII, SEC Staff, Lagos, 2022).

Page 13/18

Case Study, Box 4: A male banker as a local investor
A 38 years old male banker opined that he was unable to trade on his securities during the lockdown. He
stated that he was able to buy some shares but the prices of shares were not favourable for him to trade
on his investments. This at the long run affected his capital and standard of living. He was not making
prot from the stock market, hence his inability to further investment decisions. At present, he is not
making any investment decision as a result of his covid-19 stock market experiences.   

Considering the above submissions, one can objectively deduce that local investors’ Covid-19 stock
market experiences have greatly affected their present investment decisions. This study corroborates the
ndings of Al-Awahi et al (2020); Baker et al (2020); Lee 2020) and Ayodeji (2022) that Nigerian stock
market underperformed in 2021 as a result 2020 Covid-19 pandemic lockdown. The ndings of Baker et
al (2020) also aligned with the result of this study. Their ndings showed that the lockdown of economic
activities during Covid-19 pandemic was the main reason US stock market responded negatively to Covid-
19 than previous pandemics. Also, the ndings of Al-Awadhi et al (2020) corroborate with this study.
Their ndings showed that both total cases of death recorded as a result of Covid-19 pandemic and the
daily increase in total conrmed cases have signicant negative impact on stock market across all
companies.
Discussion
The Nigerian stock market declined to N13 trillion market capitalization during 2021 nancial markets
crisis.Investors’ losses as at June 2020 were projected at N16.88 billion. All Share Index (ASI) dropped to
12.85% from 26,415.54 basis points on February 27 2020 to 23,021.01 basis points on April 30 2020
(Raifu, Kumeka and Aminu, 2021).
Most commodities and nancial assets prices declined globally. Also, losses on export proceeds were
immeasurable while nancial sector lost about 9 trillion US dollar. Tourism and hospitality industries
suffered the greatest turmoil as a result of Covid-19 pandemic. Unemployment in both formal and
informal sectors increased greatly, leading to another wave of economic recession (Hassan and
Gavilanes, 2021; Raifu, Kumeka and Aminu, 2021).
Many lives were lost due to Covid-19 pandemic and investment frustrations, some homes were broken
and the consistent fall in investment by local investors was primarily as a result of the losses they
recorded during the 2021 stock market crisis. Most of the respondents maintained that they were dealt
with as far as investment in shares was concerned. They lamented that they lost their life time
investments and vowed not to invest again. Though very few people argued that they were still making

Page 14/18
high returns, but most of the local investors did not just lose money, they have equally lost condence in
the market.
The organic theory of Emile Durkheim also corroborates this nding. The theory is the most relevant
framework that explained the scenario appropriately. As the organic paradigm of Emile Durkheim
approaches the understanding of the society like an organism comprising of many interrelated and
interdependent parts, the same is applicable to the economies of the world and their stock markets as
envisaged in the global economic crisis of 2021. The aftereffects of Covid-19 pandemic and its
associated lockdown of major cities in China, Europe and America affected Nigeria and other world’s
economies as a result of their interdependent on one another. The world is obviously a global village and
the interrelatedness of world economies is very evident that any development in any part of the world
affects other parts (Olisaemeka, 2010). Consequently, the Nigerian stock market is not insulated from the
universal upheaval as postulated by organic theorists.
Considering the above submissions, one can objectively deduce that the aftermaths of covid-19
pandemic and local investors’ previous stock market experiences have greatly affected their present
investment decisions. The result of this study corroborates the ndings of Anh and Gan (2020) who
reported that the adverse effects of the daily increase in the number of conrmed cases of Covid-19
pandemic on stock market returns in Vietnam. This study is also consistent with the ndings of Khan et
al (2020) who showed that investors reacted negatively on stock market activities following the
conrmation of human-human transmission of Covid-19 virus. Topcu and Gulal (2020) ndings also
aligned with the result of this study. Their ndings showed that governments’ intervention helped in
offsetting the impact of Covid-19 pandemic. This study was also supported by Zeren and Hizarci (2020)
who opined that the aftermaths of Covid-19 pandemic led to the investment apathy experienced in stock
market as most investors turned to investments in gold and crypto currencies. Harjoto, Rossi and Paglia
(2021) ndings corroborate the result of this study as Covid-19 pandemic led to a negative shock to
global nancial markets.
Conclusion
The study has successfully explored the inuence of Covid-19 stock market experiences on local
investors’ investment decisions, and it was discovered that local investors exited the Nigerian stock
market as a result of 2021 stock market crisis. The crisis was orchestrated by the aftermath of Covid-19
pandemic and its inherent global lockdown of major cities where economic activities were crippled. The
study also showed that local investors’ previous stock market experiences have negatively inuenced
their investment decisions at present. The implication is that local investors who ed the stock market as
a result of stock market crises of 2008, 2017 and 2021 are still inuenced by their past experiences,
which led to investment apathy and loss of condence in the Nigerian stock market.

Recommendation

Page 15/18
Restoration of investors’ condence: For the Nigerian stock market to recover, efforts should be made
towards winning back the condence of local investors who exited the market during the stock
market crises of 2008, 2017 and 2021 since the market thrives on psychology and condence.
Abbreviations
AGM: Annual General Meeting
ASI: All Share Index
CBN: Central Bank of Nigeria
MS: Mechanical Solidarity
NBC: Nigerian Bottling Company
NCM: Nigerian Capital Market
NGX: Nigerian Exchange Ltd
OS: Organic Solidarity
SEC: Securities and Exchange Commission
SS: Social Solidarity
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Declarations
Ethics approval and consent to participate: Informed consents were obtained from participants
Consent for publication: I have given my consent for the publication of this article
Availability of data material: Data on local investors were scarce, hence my resolve to rely on qualitative
method of data collection. The data are readily available on request.
Competing interests: Not applicable
Funding: Not applicable
Participants: All the participants gave their consents
Author’s contributions: IVE wrote the introduction, discussion of nding and references, OSA reviewed the
literature, CED discussed the theory and JNN discussed the methodology
Acknowledgements: My sincere gratitude goes to selected staff of SEC and NGX
Author’s information: Not applicable 