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1. Home
2. FAQs
FAQs
1. What is a stock market?
A stock market is a formalised platform which serves two purposes:
(a) Helps companies (issuers) to raise fresh capital (normally at cheaper rates) by
offering shares/ stocks to individuals and other entities (investors) who wish to purchase
those shares as an investment.
(b) Offers a market place where such shares can be bought and sold (traded) in a
regulated and transparent manner.
2. What are shares and what do they represent?
They are assets that make you a part owner of the company. A share represents a
financial claim to a fraction of the company's profits (and losses) in proportion to the
number of shares held in that company.
In addition a shareholder has the right to vote in the control of the company in
proportion to the number of shares held. In this regard they shift from the role of a
consumer to that of an owner.
3. Who can invest in the Stock Market?
Anybody. Forget the misconception that shares are for the rich only. If you have spare
funds you can invest in shares. For instance, instead of buying more livestock,
expensive clothes or other consumables, one can use that money to buy shares in the
stock market instead. If you have any amount of cash that you do not immediately need
to spend ; if there are any items (luxury) that you do not really need to buy ; or if you can
raise funds by other means (e.g. selling another investment), then you can invest those
funds in shares. What must be understood is that like anything else, different people will
have different capacities to invest - some people will be able to afford buying more
shares than others.
4. How much can I invest?
One can invest any amount they can afford, subject to a minimum of 100 shares in any
company.
5. What are the costs of buying or selling shares?
Commission charged will be on a negotiated basis, but subject to a minimum of 0.60%
and maximum of 1.85% of the value of the transaction for equities ,minimum of 0.20%
and maximum of 0.50% for Exchange Traded Funds Transactions.
Handling fees are P15 and P10 per buy and sell transactions respectively.
Brokers will also be required to levy and collect on behalf of the BSE, the following
additional fees from clients:
- BSE transaction fee calculated at 0.15% on trades up to P5 million, and 0.12% on
trades above P5 million.
- CSD transaction fee calculated at 0.1% of the trade value
- VAT on charges at 10%
6. How can I invest in the Stock Exchange (BSE)?
You as a member of the public cannot directly buy/sell shares at the stock exchange.
You have to go through an agent, who is registered as a member of the Botswana
Stock Exchange, to do that on your behalf. This registered agent is known as a
stockbroker. A stockbroker can either be a company like Motswedi Securities, or an
individual working for such a stock-broking company.
7. What are the benefits of investing in shares?
Owning/ buying shares represents an investment and should be viewed as such. When
one buys shares they forgo current consumption to buy into future earnings potential of
the company, in the hope that :
The shares will be worth more in the future, should need arise to sell them at later
stage (capital appreciation) and that -They will also pay some income at periodic times
during the period in which they are held (dividends)
Other benefits are:
Shares can also be sold at anytime to raise cash.
8. What are dividends?
Dividends are an investor's share of the company's profits for a particular reporting
period, and are based on the profitability of the company. Dividends paid out to
shareholders depend on the number of shares held. Dividends are generally paid twice
a year (although other companies pay four times in a year). It should also be noted that
it is normal business practice for a company to decide NOT to pay a dividend for a
particular reporting period, for example:
If the company made a loss for that period
If it intends to plough the funds back into the business for future growth in the
business.
9. What is Capital Appreciation?
This refers to the upward movement of the share price over time, and is one of the
major reasons people invest in the stock market.
10. Are there any risks associated with investing in shares?
Like any other investment, there are risks associated with buying shares. For example
the value of the shares can fall after buying them. However it is important to understand
what could have caused the share price to fall, before engaging in 'panic selling' which
might cause the share price to fall even further, resulting in further losses.
11. What influences share prices?
Share prices reflect investors' expectations of how well the company will do in future. If
the expectation is positive, then more and more people will want to buy that company's
stock, resulting in increased demand for it. This increased demand will trigger an
increase in the share price. The opposite is true if the expectation is negative.
Other factors that can influence share prices include:
How well the company is managed and directed
Business climate, particularly in the sector in which the company operates
General economic conditions in the country, e.g. rate of inflation, level of interest
rates etc
Economic conditions in other competing markets
12. Where can I get information on share prices?
From a broker who is only a phone call away (Motswedi Securities can be contacted
at 3188627).
In the local media including newspapers, television and radio
13. Who do I contact when I finally want to buy/sell shares?
As already indicated, individuals cannot directly buy/sell shares at the BSE. They have
to go through a registered member of the Botswana Stock Exchange (stock broker)
such as Motswedi Securities, who will then act on their behalf.
A dealer working for such stock broking company would then execute the transaction on
behalf of the client, and on the agreed terms.
14. Can I buy shares on behalf of someone else?
Yes, all that is needed are the full names and the current address of the person for
whom the shares are being bought- together with the payment of course.
15. Can I transfer shares to someone else after buying them?
Yes, you can contact the transfer secretary for that particular company who will then
transfer the shares from the current owner to the new one. Again your stock broker can
guide you to the appropriate transfer secretary for each company.
16. When is the right time to buy or sell shares?
You can buy shares once you have defined the time frame within which to hold the
investment ; when you know what you want that investment to give you ( i.e. dividend
v/s. capital growth); and when you have determined how much you can afford to set
aside as an investment. You can then contact your broker who will then help you to
identify shares that would best suit your investment needs.
On the other hand one can consider selling when:
The company invested in continues to perform badly over a period of time, with the
share price continuing to fall.
The share price has appreciated so significantly that the investor may want to "lock in
the profits" and re-direct the funds to other investments.
The investor needs to raise funds for other personal requirements.
17. Do I always have to sell my shares when the share price goes up?
Not necessarily. That may be the beginning of a sustained period of the market
strengthening, and any premature selling may deny investors potentially higher returns.
It is always advisable to talk to your broker and get expert advice before taking any
decision to sell under such circumstances.
18. What do I have to do after buying any shares?
It is advisable to keep track of the company's performance, both as a business and in
terms of its share price. Make it a habit to know what is happening at the company by
reading every story that is written in the press about it. Business news on print, radio
and television can be a great source of valuable information in this regard.
19. Why are share prices different?
Because different companies have different levels of profitability, different
products/services they offer, are of different sizes,and are even managed differently.
These are some of the factors that determine the differences in share prices of different
companies. Just like with cattle, a Tswana breed is priced differently from a Simmental
or Sereline etc.
20. What is an I.P.O (Initial Public Offering)?
This refers to the process when a company offers its shares in the stock market for the
first time to investors in an effort to raise cheaper capital. It is also called a listing.
21. What is Privatisation, and how is it relevant to the stock market?
This refers to the process by which government relinquishes ownership (or part-thereof)
of its assets (companies) to private hands. One way of achieving this is by selling off
such government assets by way of shares in the stock market. An example would be if
government sold shares in one of its companies (parastatal) to the public through a
listing on the Stock Exchange.
22. What happens if I die?
You can rest in peace! The shares can be transferred to the rightful beneficiary (ies),
provided all necessary documentation is produced.
23. How are my interests as a small investor protected?
There are two bodies that ensure that your rights are protected:
(a) The Botswana Stock Exchange (BSE) has rules and regulations by which all its
members (i.e. stock brokers) must abide. Stiff sanctions and penalties can be imposed
on any member who behaves in any irresponsible or unprofessional manner, thus
putting the interests of the investor at risk. The BSE also has rules and regulations by
which listed companies must also abide at all times.
(b) Over and above the BSE, there is another regulatory body called the Non-Bank
Financial Institutions Regulatory Authority (NBFIRA) which has its own Act by which it
regulates stockbrokers, together with other institutions that act on behalf of third parties
on financial matters. This body also has legislative powers to take severe actions
against any transgressors in the market.
24. Can you explain the BSE chart, it is very complicated.
Bid (buy) - best price in the market at which investors are willing to pay for the stock.
Offer (sell) - best price in the market at which the shares are being offered for sale.
Last (sale) the last price at which shares were actually traded.
Your stockbroker can also help you understand the remaining columns of the BSE
chart.
DOWNLOADABLE DOCUMENTS
CSD DETAILS CONFIRMATION FORM
CSD DETAILS CONFIRMATION FORM
Download
CSD_Acc_opening_form_Companies
CSD_Acc_opening_form_Companies
Download
CSD_Acc_opening_form_Individuals
CSD_Acc_opening_form_Individuals
Download
CSD_Deposit_form
CSD_Deposit_form
Download
CSD_Transfers_form
CSD_Transfers_form
Download
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