Stockbrokers

Investor Basics

WHAT IS A STOCK EXCHANGE
A stock exchange is a market where large and small investors can buy and sell shares and other securities. In Malawi's case this includes Malawi Government treasury bills and local registered stock (bonds). The price of stocks and shares varies according to supply and demand. It is a market through which companies, government and local authorities can raise funds for expansion and development by issuing new shares or stock to the public.

What is the rights of the Shareholder?

WHAT ARE THE RIGHTS OF THE SHAREHOLDER?
As a shareholder you have the following rights :

  • To vote at shareholder meetings of the company. The company may also be forced by the shareholders to hold a meeting under certain circumstances where they can influence the agenda or voice their opinions.
  • Though not explicitly expressed in the Companies Act, share- holders must be kept informed at all times. A prospectus must be issued when a company wants to raise capital.
  • Shareholders receive equal treatment per share.
  • Shareholders have the right to receive dividends. However, this is a legitimate expectation, not a legal right.

Investment and Attitude Review

Share investment should be viewed as one of medium to long term duration if it is to yield a good increase in capital. It may often be tempting to sell shares if they reach a price considerably higher than the purchase price. You would do well not to base your decision to sell on the difference between the purchase price and current market prices.

When reviewing your portfolio the relative value of each share should be evaluated in light of current market conditions. If it is doing well, it will no doubt realise an attractive profit if sold, but would be better held as a solid maturing investment with attractive dividend potential By selling with the sole purpose of realising a profit within a year of purchase, one may be liable for capital gains tax.

Buying and Selling Shares

THE FOLLOWING STEPS WILL GUIDE A POTENTIAL INVESTOR ON HOW TO INVEST THROUGH THE MAlAWI STOCK EXCHANGE

STEP ONE FIND /CHOOSE A STOCKBROKER
A stockbroker is the investor's link with the stock exchange. A stockbroker is a licensed firm which buys and sells shares and securities on behalf of investors for a brokerage fee or commission.

Stockbroking is a personal service, so before you begin, talk to other brokers to find out what services they offer. Your choice of broker will depend on what type of service you require.

A stockbroker can be contacted whether through his registered agent, a letter, telephone, fax or through direct personal contact.

Investment Knowledge

In forming your own opinion about the performance of various shares, you should study companies' most recent published interim and annual reports .
RISE AND FALL OF SHARE PRICES

A company's share price, when first listed, is determined by supply and demand in the market place. Initially, the pre-Iisting statement or prospectus, financial statements and any projected profits are the investors guide in determining the value of the share. From the day of listing the share price is influenced by supply and demand based on investors' perceived value of the share.

Glossary of Terms

APPLICATION FORM
When a company offers shares direct to public an official application form must be used to apply for them. This form is printed as part of the prospectus

BID
Willing buyers price

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You can download and print an application form for a corporate or personal account. Mail the completed form to: register@fdh.co.mw

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Umoyo House, No. 8 Victoria Avenue North, Blantyre, Malawi +2651820219 info@ fdh.co.mw