ROLE OF THE CAPITAL MARKET IN LONG TERM

Transcript:ROLE OF THE CAPITAL MARKET IN LONG TERM:
ROLE OF THE CAPITAL MARKET IN LONG TERM DEVELOPMENT FINANCING Presented by John Robson Kamanga Chief Executive Officer – Malawi Stock Exchange. 22 November 2018 CONTENTS Defining Capital Markets Functions of the Stock Exchange as a player in the Capital Market What is Development Finance? Areas that development finance seeks to finance The Capital Market as a source of development finance Why the Capital Market? Achievements of the Malawi Stock Exchange What other capital markets have done Opportunities for Capital Markets Challenges of the Capital Market Solutions 1. DEFINING CAPITAL MARKETS The Capital Market is a part of the financial system concerned with channeling wealth from savers/investors to institutions (public or private) that can put it to long term productive use. Primary market Where capital is raised Where new issue of capital market instruments is done Secondary market Where investor’s trade in previously issued securities Where trading of securities is done 2. FUNCTIONS OF THE STOCK EXCHANGE AS A PLAYER IN THE CAPITAL MARKET Providing a link between financial raisers and financial suppliers (investors) Providing market place for buyers and sellers of investment assets Supervising trading activities Supervising the conduct of member firms Providing information services such as share price information Providing announcements made by listed companies 3. WHAT IS DEVELOPMENT FINANCE? Development finance involves public and private investment in physical development, redevelopment and/or business and industry aimed at supporting, encouraging and influencing expansion. Development finance aims to establish proactive approaches that leverage public and private resources to solve the needs of business, industry, developers and investors. 4. AREAS THAT DEVELOPMENT FINANCE SEEKS TO FINANCE Government projects e.g. roads, utilities, airports, schools etc Established industry e.g industrial parks, manufacturing, commercial retail centers etc Development & redevelopment - projects that require major public resource commitments to catalyze new private sector development Small businesses and micro-enterprises Entrepreneurs - not ready for traditional financing and need a unique approach to help them find the working capital needed to expand and grow. 5. THE CAPITAL MARKET AS A SOURCE OF DEVELOPMENT FINANCE Government bonds Main Board Alternative Capital Market The MSE has platforms to cater for various capital needs to provide inclusive access to capital for businesses. Corporate bonds 6. WHY THE CAPITAL MARKET ? Large pool of resources Low cost financing Long term financing May offer funding for riskier activities that would traditionally not be served by the banking sector Offers locally denominated