Equities market requires strategy

A good investment strategy backed by knowledge and understanding is key to reaping good returns on the equities market for retail investors, an expert has said.

This advice comes as the participation of retail investors in the equities market is still low, as it has for long been misconstrued as elitist.

Sharing insights on investing in the equities market for retail investors, prominent investor-preneur Courage Nemaungwe admitted the market can be volatile, which calls for a good strategy as well as a clear set of objectives to achieve gains on the market.

This, he said, also requires knowledge, studying the market itself with guidance from experts until one becomes knowledgeable in basic things like timing and a particular stock to pick.

Nemaungwe himself began his investment journey on the Zimbabwe Stock Exchange (ZSE) at a very tender age while he was still in primary school and researched it with help from a relative who was well-versed in stock markets.

“You need an investment strategy. The market can be very dynamic, especially in our environment where things can change anytime. This means you cannot have a static strategy in a dynamic market like ours.

“In my view, Zimbabwe is very fast so you need short-term strategies to win because if you hold on to long-term strategy you may lose.

“You should also be able to harness your resources before implementing your investment strategy, the money should be available for you to invest the moment there is a good opportunity. The problem with most people is once they get the money they want to spend it right away,” he said during one of the programmes organized by the ZSE to commemorate Global Money Week (GMW).

The GMW is an annual global awareness-raising campaign on the importance of ensuring that young people, from an early age, are financially aware, and are gradually acquiring the knowledge, skills, attitudes and behaviours necessary to make sound financial decisions and ultimately achieve financial well-being and financial resilience.

This year’s GMW, which is the 11th edition, ran from 20 March to 26 March 2023 under the theme “Plan your money, plant your future.”

Last year, throughout GMW, the Reserve Bank of Zimbabwe (RBZ) along with other 19 financial sector players reached 3 664 853 children and youth through both digital and physical communication channels.

Nemaungwe highlighted the need for individuals to invest in time for education in capital markets in order to make informed decisions while also tracking their investments.

This, he said, would graduate them from layperson to expert.

“When you are interested in the equities market, invest at least one hour a day for the next five years and you will be an expert and make good investment decisions.

“You cannot understand ratios and what they mean if you don’t get knowledge about them,” he said.

Activity in capital markets has for decades been dominated by foreign investors and institutional investors. Retail investors’ participation has been low due to, among other things, lack of knowledge.

However, there are efforts that have been made by the Zimbabwe Stock Exchange (ZSE) and other capital markets players to boost retail investors’ literacy and involvement. Digitalization has also enabled retail investor participation to increase with products such as ZSE Direct enabling retail investors to trade using their mobile devices.

Escrow Group also introduced the C-Trade platform that also enables retail investors to trade shares from their devices, which has helped increase their participation.-ebusinessweekly