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Transparency can be defined as the degree to which information about trading (both for pre-trade and post-trade information) is made publicly available. FINSEC values transparency and ensures that investors can get this information timeously. Pre-trade information influences the posting of firm bids and offers as it enables investors to know, with some degree of certainty, whether and at what prices they can deal.

Post-trade information is related to the prices and the volume of all individual transactions concluded. FINSEC promotes market practices that guarantee fair treatment of orders and a price formation process that is reliable and further aims to ensure that investors are given fair access to market facilities, prices and market information.

There are two primary methods used to analyse securities and make investment decisions namely fundamental analysis and technical analysis. Fundamental analysis is a method often used by investors to make their investment decisions. It involves analysing a company’s financial statements to determine the fair value of the business, while technical analysis is more complicated and assumes that a security’s price already reflects all publicly-available information and instead focuses on the statistical analysis of price movements.

When determining whether a company’s stock is a good investment, fundamental analysis is one way investors can reach a decision. One question that is important for investors to consider is the difference between a great business and a great investment. The answer for that question is price. If investors pay too high a price for even the best stock, they may not make a good return on their investment. Therefore, a great investment does not necessarily have a high price. The point of this question is that the price they pay for a stock does matter enormously; it is the most important factor in their return. Accordingly, doing their thorough fundamental analysis is of great importance prior to making an investment.

Fundamental analysis includes getting to know a company, the health of its business and its future prospects. It includes reading and analysing annual reports and financial statements to get an understanding of the company’s comparative advantages, competitors and its market environment. On analysing these factors investors get a better understanding of whether the price of the stock is undervalued or overvalued at the current market price. Fundamental analysis can also be performed on a sectoral basis and in the economy as a whole.

For investors, the market price of a stock tends to move towards its ‘intrinsic value’, which is the ‘true value’ of a company as calculated by its fundamentals. If the market value does not match the true value of the company, there is an investment opportunity. An example of this, is that if the current market price of a stock is lower than the intrinsic price, the investor can purchase the stock because they expect the stock price to rise and move towards its true value.

Alternatively, if the current market price is above the intrinsic price, the stock is considered overbought and the investor often sells the stock because they know that the stock price will fall and move closer to its intrinsic value. The key element all investors look after is earnings. Before investing in a company they want to know how much the company is making in profits. Future earnings are a key factor as the future prospects of the company’s business and potential growth opportunities are determinants of the stock price. The Financial Securities Exchange (FINSEC) is a Zimbabwe registered securities exchange (Alternative Trading Platform) and a member of the Escrow Group. The Escrow Group has interests in the financial services and technology sectors. Corpserve Registrars and Escrow Systems are the other members of the group.

For more information contact: -2nd Floor ZB Centre, Cnr Kwame Nkrumah and 1st Street – Harare, Zimbabwe – Tel: +263 4 758193 – Email: info@finsec .co.zw – www.finsec.co.zw – Twitter: @FINSECZim