Thursday, February 25, 2021

Analyst demystifies financial markets

SUNDAY STANDARD financial journalist VICTOR BAATWENG chit-chats with a financial analyst, Ikanyeng Segonetso, who is also the author of ‘Creating Wealth, Investing in Botswana Stock Market’, a book that simplified finance jargon and makes it understandable to laymen.

VB: First things first, who is Ikanyeng Segonetso?

IS: I’m a banker by profession who is employed full time in the Treasury department of one of the leading banks. Prior to that I worked in the Capital Markets locally. I’m an investor in the stock market and I have vested interest in all types of investments from real estate to private equity. I was educated in Africa, Asia and Europe; I hold Master of Science in Finance from Europe, Bachelor of Financial Engineering (Hons) from Asia and an Investment Management Certificate (IMC) from CFA Society of the UK, formerly UK Society for Investment Professionals. Since most people do not know Financial Engineering, it is basically the application of mathematical solutions to finance problems. Currently I am enrolled for CFA Program at Level 1.

VB: Tell us about your latest book, “Creating Wealth”.

IS: This book aims to assist beginners in the stock market by giving them a practical and simple approach. It lays down the foundation of the stock market in order to build an understanding that would subsequently give readers an appreciation of the comprehensive investment process in Botswana. The book is intended to create awareness about investing in the stock market as one way of creating wealth. When I wrote this book, I aimed to use relatively simple language that can be understood by everyone. I limited the length of the sections by being specific and selective in terms of what I deemed to be relevant. I did so because I wanted the book to be brief and readable for everyone. I made the decision in cognizance of the fact that Batswana are not natural readers; a thick book would scare them away as David Magang once said “To hide anything from Batswana, put it in a book”.

VB: What prompted you to write this book?

IS: I wrote this book after getting numerous questions from friends, colleagues, family and relatives about investing in shares, bonds and other instruments just by virtue of me being a finance and investment graduate. As a result, I challenged myself to create a reservoir of information where everyone can dip their hands, a source of material that I can confidently recommend to other people. After studying the local market and the material in circulation with regards to investing in the stock market, I realized that there is no single source that provides information on the steps that you need to take or follow when you want to invest in the stock market, particularly simple guidance for potential investors. After experiencing how investing functions, I was even more motivated to share this information with the masses in the spirit of giving back to the society.

Additionally, I was driven by the fact that for so many years, African writers focused on literary work with very little attempt to write about real world challenges such as economic issues. We have seen some of the best literary work out of this continent, the likes of Chinua Achebe, Ngugi Wa Thiong’o, Eddie Iroh and Bessie Head, but the same cannot be said about books that deal with economics, engineering, natural resources etc, where our Caucasian counterparts continue to dominate. As David Magang is saying, young people need to be challenged to write about real economic issues of this country. This calls for a paradigm shift from popular works on fiction and poetry to non-fiction. We need to plough back the acquired knowledge to the benefit of the society. For instance, there is a lot that needs to be done in the area of household income taxation; Batswana do not simply understand the tax system. We need some public education programs to address such issues including retirement and life insurance contracts.

VB: What challenges did you encounter when writing this book?

IS: Challenges were wide and varied. The key stumbling block was adapting the finance jargon into simple language that could be understood by everyone. Further, in some instances I got under pressure due to some other commitments and time constraints.

VB: What drives your passion for capital markets?

IS: My passion is driven by measuring and managing the value of companies. Additionally, key interest in analytics and using the financial instruments to generate income without necessarily producing any product for resale fascinates me. As I have an entrepreneurial spirit, the idea of profiting out of volatile movements appeals to me.

VB: What is your general view of the understanding of capital markets by locals (Batswana)?

IS: Most of Batswana simply do not understand what investing is about. They know it’s out there but they do not understand the functionalities of it. However, Botswana Stock Exchange annual report shows that investor contribution to turnover by citizen investors have grown rapidly over the years, suggesting that more Batswana are gradually appreciating the world of investing in the stock market. Even then, those who own shares in listed companies do not know the tenets of investing such as stock picking skills, company valuation and fundamental analysis. They simply use the na├»ve approach where they purchase stocks based on hearsay from family, friends and relatives or by just simply associating with the brand. Many Batswana are hyped about BTCL IPO, but if you ask one of them whether they understand BTCL business model, growth prospects in the market in which it operates, its value, just the fundamentals, they won’t give you an answer. They are just followers of the more rational investors.

VB: Would you say Batswana’s participation in capital markets is satisfactory?

IS: Local individual investor participation in capital markets is nowhere near satisfactory. According to the BSE annual report, local individual investor contribution to equity turnover was less than 10 percent in 2013 with an average contribution of 8.4 percent over the past five years. Even though there has been infinitesimal growth in retail investor participation, Botswana is way behind comparable emerging market countries in terms of participation by local individual investors in the bourse.

VB: What could be the cause of their lack of interest?

IS: It’s not lack of interest per se, but rather lack of financial training and awareness. However, on the grand scheme of things, the stock market has been stigmatized as a big guns millionaire club where players splash cash. This school of thought discourages many individuals from investing.

VB: What could be done to solve such kind of problem?

IS: Individuals, the private sector, government and civil society organizations should strive for an educated and informed nation as dictated by Vision 2016. This can be achieved through an upscale in public education programs that encompass various methods such as books, SMS technology, edutainment videos, stock market simulation games both online and offline at school and general public level, road shows, interactive software programs, testimonials and one-on-one presentations. It goes without saying that for this to be a success, investing in the stock market has to be demystified.

VB: Your book offers quite a lot in terms of what one can do as an amateur capital markets participants, where can one buy it?

IS: This book will be made available countrywide at bookstores and major Choppies outlets. Currently you can call: 76237980 to purchase the book. The retail price is P200.00

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