THE ROLE OF DEALERS & INVESTMENT ADVISORS IN THE CAPITAL MARKET A Presentation By MS ABENA AMOAH, EXECUTIVE DIRECTOR SAS Strategic African Securities Ltd.

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Presentation transcript:

THE ROLE OF DEALERS & INVESTMENT ADVISORS IN THE CAPITAL MARKET A Presentation By MS ABENA AMOAH, EXECUTIVE DIRECTOR SAS Strategic African Securities Ltd 2nd Ridge Link, North Ridge P O Box KA 16446, Accra Tel: – 9, Fax: , Website: MAY 27, 2004

AGENDA  Introduction  Capital Markets’ Structure  Dealers & Investment Advisors  Popular Misconceptions  The Media & Dealers/Advisors

INTRODUCTION Successful business environments require vibrant capital markets, which must provide funds that:  Are Readily Available  Are Easily Accessible  Are Relatively Cheap (Properly Priced)  Have Adequate Terms to Maturity  Can Be Re-Packaged and Exchanged

CAPITAL MARKETS’ STRUCTURE  Users of Funds  Providers of Funds  Dealers & Advisors (Middlemen)  Instruments/Products  Regulators Investo r Regu lator Dealer Adviso r Seeker Product

USERS OF FUNDS  Companies seeking growth, launching new products, retiring debt, start-ups  Municipalities undertaking projects  Investors wishing to realise their entrepreneurship  Mutual Funds & Unit Trusts  Governments

PROVIDERS OF FUNDS  Individuals/General Public  Pension & Provident Funds  Mutual Funds & Unit Trust  Venture Funds  Government

INSTRUMENTS/PRODUCTS  Bonds  Ordinary or Equity Shares  Preference Shares

BONDS  Long-term loans issued by credit worthy institutions  Issuer pays periodic interest to investors  Principal amount paid back to investors at maturity  Very limited market in Ghana. Examples of corporate bonds issued are HFC bonds, SSNIT educational bonds, GGiLBs

 Confer ownership in business  Give voting rights in General Meetings  Give right to dividends out of profits  Can be issued under private placement  Issued to general public under a public offering ORDINARY SHARES

PREFERENCE SHARES  Provide investor with larger dividend  Limited voting powers at general meetings  Often convertible into ordinary shares or redeemable

Rules & Institutions that ensure orderly & fair dealing in capital markets, especially where it involves public funds:  Rules include SIL, LI 1728, GSE Rulebook  Institutions: SEC, GSE, BoG REGULATORY ENVIRONMENT

Firms and Individuals licensed by regulators to :  Provide Investment Advice  Design Financial Products  Trade in Financial Products  Provide Investment Management Services DEALERS & ADVISORS

 Minimum Capital  Quality of Officers  Periodic Reporting  Continuous Development Requirements for Re-licensing LICENSING REQUIREMENTS

WHAT DEALERS/ADVISORS DO  Trade in securities on the stock exchange  Maximise wealth, minimise losses for investors Jan – Apr Volume, mil Value, ¢bil At 24/05/ GSE Performance 92.05%154.67%45.96%11.42%16.55%

WHAT DEALERS/ADVISORS DO  Raise Capital For Institutions/Government YearIssuerInstrument$ Million 1990Government of GhanaDebt Accra Brewery; Super Paper ProductsEquity Mechanical Lloyd; GoG (AGC); UTC EstatesEquity HFC; GoG (PAF); SSB; PZEquity GoG (GCB); GGL, HFC; AluworksEquity/Debt Mechanical Lloyd; HFCEquity/Debt HFC; Accra BreweryEquity/Debt HFC; Metalloplastica GhanaEquity/Debt GoG (PBC); Accra Brewery; HFCEquity/Debt Home Finance CompanyDebt HFC; Sam WoodeEquity/Debt GoG (CPC); CFAO; Ghana BreweriesEquity Accra Brewery; ClydestoneEquity5.29 TOTAL254.48

 Provide investment advice  Design and market products like mutual funds, unit trust, etc  Undertake and publish investment research  Provide investment management services  Provide input into capital market laws  Undertake public education WHAT DEALERS/ADVISORS DO

OTHER LICENSED OPERATORS These include:  Registrars  Trustees  Custodians

BY INVESTORS :  Market is only for rich people with huge sums to invest  Advisors are expensive  Stock market investments are speculative highly-risky investments  I can only buy shares during IPOs  I should frame my share certificates  My long-term savings must be in short- term investment products POPULAR MISCONCEPTIONS

BY COMPANIES THAT SHOULD LIST:  My company will be taken over if I list  Listing is very expensive  The market can’t supply the amount I want to raise  My company is worth more, past financial performance is not important in valuing my business  I have no further obligations to the public after an IPO

 Investigative financial journalism  Accurate reportage of financial news  Partners in public education  Investors  Continuous education MEDIA & DEALERS/ADVISORS

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