Many Namibians, especially in the middle to lower income categories are failing to capitalise on possible income from the local stock bourse due to ignorance.
Although the Namibian Stock Exchange (NSX) remains one of the biggest money spinners in the country, making billions in earnings and traded shares, it still remains a hive of the affluent and institutional investment.
The Villager understands that most Namibians neither have in-depth understanding nor the basic know-how on the day-to-day operations of the local bourse; let alone how to invest in shares.
Standing at a staggering N$1.243b in free float market capitalisation by total shares in issue and N$1.146b in market capitalisation in free float, NSX is currently the third largest stock market in sub-Saharan Africa after South Africa’s Johannesburg Stock Exchange (JSE) and Kenya’s Nairobi Stock Exchange (NSE) in terms of capitalisation.
Statistics released by the local equity market also show that NSX reached a staggering N$9.3b market capitalisation from trade exchanges last year.
However, very few Namibians have been able to take advantage of the investment opportunities at the equity markets; a situation that has prompted Simonis Storm Securities research analyst, Rudolf Kuschke to say: “The NSX has not had many programmes to educate Namibians on the operations of the bourse. It is very important for the NSX to engage in outreach programmes in schools.”
He added that, “When I was in school, I never knew about the existence of the local stock market until I completed university. Such is the situation for most Namibians.”
Kuschke further asserted that the NSX is also too limited on available shares to the ordinary person as most international companies are obliged to keep at least 35% of their investments in Namibia.
This, he noted, has seen the companies listed on the stock market bidding for the same shares that are released by other companies, making it very difficult for individuals with the capacity to invest in the stock market to compete for the same share prices with institutions.
An in-house analyst at NSX also told The Villager in confidence that the companies trading at the stock market also have rather high prices for their equities, making it difficult for locals to afford considerable investments on the NSX.
“The nature of the stock market is that it’s a risky investment, so people are sometimes very skeptical as they are not willing to lose their money. However, there must be efforts put in explaining to individuals that the stock market also has other guaranteed investment opportunities including bonds. Such investments have a long-term guaranteed return and it is unfortunate that very few Namibians are privy to such information,” he said.
However, in other countries including Botswana, which has the same economic stability as Namibia, stock markets are a good source of generating money for the medium to low income earning earners.
The Botswana Stock Exchange is also rated significantly high in sub-Saharan Africa in terms of share trade from the ordinary folk.
In the years 2007-2008, most low to medium income earning Zimbabweans made huge profits from speculative buying of shares although the rewards were driven by the hyper inflationary environment in that country.
While the NSX seems short on sensitisation material, the JSE has an in-depth website that also helps investors invest while learning how to engage more in the stock market.