Aide Memoire of Industries Participating on LuSe.

The stock market is not for everyone. Our opinion is that it should be. However, we understand that ubiquitous information asymmetry render many potential would be investors ill equipped to make decisions of what stock can build up a value creating portfolio. TFHZPC seeks to provide some insight into the decision making process because we believe in the statement put forward by Drucker in his 1988 article that “To satisfy the customer is the mission and purpose of every business. The question ‘What is our business?’ can therefore be answered only by looking at the business from the outside from the point of view of customer and market”. As an interested stakeholder, the aforementioned statement makes the fundamental basis of why individuals or firms invest with confidence in particular stock. Knowing that those they entrust understand their business and are able to generate sustainable value.

In 2017, potential investors on the Lusaka Stock Exchange (LuSe) will need to know what industries companies belong to in order to make astute and informed decisions on which companies to target for their portfolios. We will have you know that the following are the industries participating on the LuSe include mining, farming, financial services, insurance, construction, real estate, and retail. Each of the companies in these industries have answered the quintessential question “What is our business”. To survive from one financial year to the next, this question must be constant in the minds of management teams running these listed firms. Shareholders bound by corporate governance rules depend on them to constantly remind themselves of this question to ensure they continue to deliver value for the firm. That is the reason it’s called a “Going Concern”.

However, we are not oblivious of the challenges that current macro environment pose to these businesses. Whether it’s the threat of environmental factors such as storms or army worms that can affect the 2017 harvest of maize in the farming industry to tightened liquidity in the financial industry, the fundamentals of satisfying customers must remain the purpose of every business. Therefore, prudent management of the company’s resources must be a concern of potential shareholders of these companies. In addition, they must also understand that different industries respond differently to the macro environment. Some may be winners others losers. Conversely, company strategies will need to be decoded to ensure a substantial return on investment. For that you have TFHZPC.

Hello 2017! But Wait. Why a Stoppage of Trade on Lafarge Security?

After enjoying a brief hiatus over the festive season that was laden of copulas amounts of all manner of hedonistic treats, we clicked on the Lusaka Stock Exchange’s lead story of a trade suspension ergo “SUSPENSION OF TRADING IN LAFARGE, ISINZM0000000011”. Now before all the Christmas pudding you eat starts to dissolve quickly due to panic, we at TFHZPC felt it necessary to tell you the tale of information symmetry.

You see, when the Security and Exchange Commission (SEC) suspends a trade, it’s not all doom and gloom. Their purpose is to ensure that stakeholders such as shareholders are kept informed of all that is happening with the company. According to regulations, all listed companies are expected to provide information regarding their activities (that annual report the folks at TFHZPC love to decode) and interim reports that show how the companies are performing. Hence why in verbatim LuSe stated “..inform the market and shareholders that in keeping with the functioning of fair and transparent and orderly securities trading environment in this stock, the LuSe has suspended with immediate effect trading in LAFARGE security… The suspension in this stock will be lifted after seven days”

Normally, such stoppages are usually as a result of lack of material information on the traded security therefore in order to maintain information symmetry, trade is suspended until such a time that all obligations are meet by the trading company. The amount of time for a typical suspension is often judged on a case by case basis. This guards against information asymmetry and ensures that traders of shares are able to make informed decision about whether to buy, hold or sell stock on LuSe.

So before you consider dumping your stock, make an informed decision. This is why agencies such as the SEC exist: To serve and protect the interest of investors. As we prepare to review the 2016 annual performance of the premier companies on LuSE, we pledge to ensure that all information bring to you, as always, will be as numerically accurate, concise and astute. That’s our new year’s resolution. But you already knew we would keep the promise. Didn’t you? Happy new year!