Word on the need to invest in the capital markets is still to reach the targeted audience, but with planned enhanced engagements the market can achieve exponential growth in the number of participants, according to Escrow group chief executive officer Collen Tapfumaneyi.
His comments come as the country has in the last two years experienced a retail investor frenzy that has been accompanied by increased investor education including on social media platforms.
Investor education focuses on issues relevant to the education and information needs of individuals who participate or are considering participating, in the financial markets. In addition, investor education can help investors better assess the relevance and suitability of investment advice.
Regulators across the globe, including the Securities and Exchange Commission of Zimbabwe, which a year or so ago appointed Head of Investor Education, have adopted investor education as a key strategy to enhance investor protection, promote investor confidence and foster investor engagement in financial planning and decision-making. The most important investment one has to make is to invest in knowledge, and investor education helps in that aspect.
Another phenomenon that has helped retail investor participation is the introduction of online and application-based trading platforms.
Traditionally, stock market investing was a preserve of institutional investors and a few very wealthy individuals who, in most cases, invested through institutional investors.
If going direct, the individuals would still need to engage a stockbroker to buy and sell shares on their behalf. The structure of the stock exchange is that only stockbrokers can execute trades/transactions known as shares purchases or sales on behalf of investors.
However, the brokers were for long not allowed to advertise their activities making it difficult for individual investors to know how to go about investing on the stock market. But not anymore.
In recent times, as a result of innovative technology, and new regulatory reforms, there has been a growing evolution of retail investors across the globe.
The participation of retail investors on stock exchanges has been growing over the years as a result of online trading platforms. This has had a significant impact on share price movements and stock market trends. A growing literature presents evidence of the impact online trading platforms have had on individual investors’ participation in stock markets and the impact this has had on share price movements.
Tapfumaneyi, whose Escrow Group runs among other ventures stock market trading platform C-Trade, said such platforms present greater opportunities for expansion in the number of retail investors.
C-Trade was launched in 2018, and this effectively opened capital markets to all and enhanced financial inclusion.
Another platform, ZSE Direct was launched in September 2020 and together the two platforms coupled with increased investor education by both the Zimbabwe Stock Exchange and the Securities and Exchange Commission, have resulted in increased participation by individual investors on the ZSE.
Tapfumaneyi said as investors become more connected and comfortable with Financial technology the ripple effects will be felt throughout the capital markets more than what has been recorded to date.
From July 2019 when the platform was launched, the total number of registrants or first-time investors shows a significant uptake comparable to the approximately 7 500 active investors accrued since dollarisation.
Such an exponential increase signals a market poised for growth as happened last year when the number of participants on C-Trade grew by 60 percent from the previous year. C-Trade has approximately 26 000 users currently.
To grow the numbers C-Trade plans
new product offerings to allow investors with varying demands to invest in the capital market.
To date, unit trusts, ETFs, and investment clubs have been added to the platform and Tapfumaneyi says there is now a need to look at having an intense Marketing campaign “to ensure Zimbabweans across the width and breadth of the country are educated about investing in the capital markets.”
There is even more to come.
“When the time is right we will also be making further announcements planned initiatives and innovations that we are confident will excite the market.”