Stock market investments an elitist activity?

13 Jul, 2018 - 00:07 0 Views

eBusiness Weekly

Kudzanai Sharara
Rosemary Mukaro is a young executive who has been working in the financial services sector for more than 3 years now, but still has little appreciation of how to invest in stock markets. There is need to demystify stock market investment as an elitist activity.

Mukaro’s story is not uncommon among young black Zimbabweans, of all income levels, who lag behind other demographic groups when it comes to investing in stock markets.

In fact, investing in equities market is seen as an elitist activity — a preserve for a few.

Former Finance Minister Tendai Biti even called it an “old boys’ club” made up of “hunting wolves”, a rather unfortunate assessment. But to those who lack understanding they might as well have believed him.

This is despite the fact that the country’s equities market is one of the oldest and better developed stock exchanges in Sub-Saharan Africa.

For as far back as I can remember, stock market prices have always been carried on daily basis by mainstream media both electronic and print.

But the statistics on the ground shows there is lack of interest if not a knowledge gap in the what and how one can participate in the stock market.

According to Chengetedzai Depository Company (CDC), only 5 619 individuals have accounts to buy or sell shares with just 160 individuals having opened accounts in June 2018.

The total number of accounts on the CSD increased by 351 to 24 236 but the bulk, numbering 15 982 or 66 percent, belongs to Deceased Estates, Unclaimed shares, Trusts, another indication of the little interest towards equities markets.

Otherwise how do you explain shares worth $308 million struggling to find rightful owners.

Of course a large number invest through pension funds, with 601 account holders, but that’s beside the point, the lack of interest is still worrying, as investment is part of saving which is an important component of a country’s economic growth.

If we save too little, it will mean that there will be insufficient funds available to finance investment in physical and social infrastructure.

Insufficient investment in an economy also means sub-optimal economic growth, sub-optimal job creation and inferior overall living standards relative to nations with a better savings performance.

I digress, the question we need to answer today is why only a few are invested in our capital markets, which are unfortunately playing second fiddle to sport betting which has grown like it’s on steroids.

Though much older and more established, few (especially the youth) are giving stock markets attention or probably it’s an issue of accessing the markets or rather lack of information.

If it’s an issue of marketing, then probably there is need for constantly selling on the minute, something which might not happen as the ZSE has commercialised access to some of the information.

Perhaps the regulator needs to re-imagine its approach. The once-in-a-while approach won’t cut it. Perhaps setting up Capital Market Clubs (CMS’s) in high schools and tertiary colleges may help recruit some.

The idea is to have a song that’s constantly playing. In this regard, upping the investor education spend may be necessary.

C-Trade could do the trick

At least we are going mobile. C-TRADE is an online and mobile trading platform for the trading of shares on the Zimbabwe Stock Exchange, and will be the first of its kind in Sub Saharan Africa.

The platform will enable investors, both local and foreign to purchase securities from anywhere in the world anytime, using mobile devices.

The initiative is being led by capital markets regulator, Securities Exchange Commission of Zimbabwe (SECZ) and seeks to promote financial inclusion by encouraging participation by the smallest retail investor.

How the country has adopted mobile phones as a primary form of transacting should serve as an inspiration. Zimbabwe has a mobile penetration rate 84, 6 percent. For capital markets, this means a mobile-phone strategy is vital.

Individual investors should be able to deposit, trade, monitor investments and withdraw monies all via their mobile phones. If the on-boarding process can start and end on the mobile phones, then we’ll be heading somewhere.

I dream of the day when more ordinary Zimbabweans would participate in our capital markets.

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