Determinants of Investors’ Preferences for Sectoral Investments in Nigeria Capital Market
BITRUS HUDSON USMANA
Bursary Department
University of Maiduguri, Maiduguri
ABSTRACT
An investor in the Capital market has to make a choice on which portfolio to invest in. A portfolio is a combination of securities which include debt and equity. The combination of debt and equity is necessary because while debt provide assured opportunities, equity gives higher and consistent long term returns but with an element of uncertainty. Therefore in a portfolio, a combination of debt instrument and equity is important to complement each other. By foregoing consumption today and investing their savings, investors expect to enhance their future consumption possibilities by increasing their wealth. According to classical economic theory, investors are assumed to be rational and competent. The theory assumes that investors have the same preference, perfect knowledge of all alternatives and an understanding of the consequences of their decisions. Also, markets are assumed to be efficient. Neither technical nor fundamental analysis would assist an investor to achieve returns greater than those that could be obtained by holding a randomly selected portfolio of individuals stock with comparable risk. In recent years, there has been increased enthusiasm in the stock market by individual investors. Attention is increasingly directed to local investors whose investments are known to have longer horizon than foreign ones. The problems lays in the fact that more and more attention has been paid to institutional investors while less attention has been given to small scale or individual investors, therefore, this study looks into the determinant of investors’ preferences for sectorial investment in the Nigerian Capital Market, the study is been guided by two objective and two research question, also two null and two alternate hypotheses were postulated. The result of the findings reveals that government policies do significantly influence investor’s perceptions in the Nigerian Capital Market; giving incentives to investors do significantly influence their perception to invest in Nigeria Capital Market.Based on the findings the following recommendations were made; policies regarding investment in Nigerian Capital Market should be looked into, to make room for investors participation in decision making as well; new policies that will include investors motivation should be enacted and implemented.