Project Abstract

The abstract of the research project is as follows The Nigerian macro economy plays a significant role in determining the value of share prices in the country's stock market. This study aims to investigate the various factors within the macroeconomic environment of Nigeria that influence share price determination. By analyzing key economic indicators such as inflation rates, interest rates, exchange rates, GDP growth, and government policies, this research seeks to provide a comprehensive understanding of the relationship between the macroeconomy and share prices. The research methodology involves collecting historical data on the Nigerian macro economy and stock market performance over a specific period. Statistical analysis, including regression analysis and correlation studies, will be conducted to identify the impact of macroeconomic variables on share prices. Additionally, interviews with financial experts and policymakers will be conducted to gather qualitative insights into the topic. The findings of this study are expected to contribute to existing literature on the Nigerian stock market and macroeconomic influences on share price determination. Understanding how macroeconomic factors affect share prices is crucial for investors, policymakers, and financial analysts to make informed decisions in the Nigerian capital market. By identifying the key drivers of share price movements, this research can provide valuable insights for market participants to navigate the volatility and uncertainties in the Nigerian economy. Overall, this research project seeks to shed light on the complex relationship between the Nigerian macro economy and share price determination. By exploring the various factors at play and their interconnections, this study aims to provide a comprehensive analysis that can help stakeholders better understand the dynamics of the Nigerian stock market. Ultimately, the findings of this research can inform investment strategies, policy decisions, and academic discussions on the role of macroeconomic variables in shaping share prices in Nigeria.

Project Overview

INTRODUCTION

Stock market reacts in response of various factors ranging from macro economic, political and socio-cultural behavior of any country. Like any other stock market the Nigerian Stock exchange also reacts either positively or negatively by a number of factors occurring within or without the macroeconomic system. A stock exchange is an organized institution where the securities of joint stock companies are traded freely and the prices are determined by the forces of supply and demand. In simple, it is a place where buyers and sellers come together to exchange their holdings (shares, bonds, derivatives etc.) during on business hours.

Investment in equity shares in the stock exchange is one of the major avenues of investment that yields considerable returns to investors. It is also a source of finance for the capital requirements of firms. Returns from such equity investments are subject to vary owing to the movement of share prices, which depend on various factors which could be internal or firm specific such as earnings per share, dividends and book value or macro economic factors such as crude oil price/subsidy removal interest rate, GDP, inflation, government regulations and Foreign Exchange Rate (FOREX). Share price is used as a benchmark to gauge performance of a firm and its variations as an indicator of the economic health or otherwise of a firm hence the need to be conversant with the factors that could adversely affect share prices.

However, this study will provide an overview of the Nigeria macro economy and its effect on bank share value. This study will also make use of Capital Asset Pricing Model CAPM couple with the use of past stock market price and dividend payout to determine the value of the bank stock. The valuation from this analysis in this study will form a basis for signifying if the stock is overpriced or under priced. Recommendations will also be made on if the bank stock should or shouldn’t be bought for more or less.