Se­cu­ri­ties mar­ket yet to take off

Lesotho Times - - Business - Bereng Mpaki

THE Maseru Se­cu­ri­ties Mar­ket (MSM) is yet to get off the ground de­spite all the req­ui­site in­fra­struc­ture be­ing in place for its op­er­a­tion.

Ac­cord­ing to the Cen­tral Bank of Le­sotho (CBL), the bourse has not com­menced op­er­a­tions since its open­ing in Jan­uary this year due to the slow up­take by the pri­vate sec­tor.

CBL Fi­nan­cial Mar­kets Di­rec­tor, Bohlale Phakoe, told the Le­sotho Times this week the apex bank had been ap­proach­ing in­di­vid­ual com­pa­nies to moti- vate them to list on the MSM. A stock ex­change is an or­gan­ised and reg­u­lated fi­nan­cial mar­ket where se­cu­ri­ties such as bonds, notes and shares are bought and sold at prices gov­erned by the forces of de­mand and sup­ply. The MSM was es­tab­lished by the CBL to en­cour­age wider share own­er­ship and raise medium to long-term cap­i­tal. The CBL’S role is to reg­u­late and su­per­vise its op­er­a­tions with­out be­ing in­volved in the bourse’s day-to-day op­er­a­tions. It is cur­rently based at the CBL build­ing un­til the pri­vate sec­tor can take over the bourse. “When we launched the MSM in Jan­uary this year, ev­ery­thing that needed to be set up from an in­fra­struc­ture point of view was in place,” said Mr Phakoe.

“So, So, the next step, which is what we are cur­ren cur­rently do­ing, is ap­proach­ing com­pa­nies to en­cour­ageenc them to trade in the se­cu­ri­ties marke mar­ket.”

He s said they could not com­pel the pri­vate sec­tor to par­tic­i­pate in the se­cu­ri­ties mar­ket hence the cam­paign to en­cour­age com­pa­nies to regi reg­is­ter.

“We need com­pa­nies to of­fer their shares to the pu pub­lic and com­ing to list with the se­cu­ri­ties m mar­ket or ex­change. How­ever, for that to happe hap­pen, the firms need to con­vert from be­ing pri­vat pri­vate en­ti­ties to pub­lic com­pa­nies.

“The “They also need have fi­nan­cial state­ments for the past three years show­ing that they have b been go­ing con­cerns for at least three years,” Mr Phakoe said.

“We are con­vinced that some of the com­pa­nies a are now pre­par­ing to list on the MSM as we had one-on-one meet­ings with them ex­plain ex­plain­ing ev­ery­thing about the se­cu­ri­ties m mar­ket.”

Among the mer­its of MSM, he said, was help­ing com­pa­nies to raise cap­i­tal through long-term loans of w which some com­mer­cial banks were un­able to de­liver.

Mr Phakoe said the se­cu­ri­ties mar­ket would also help to en­sure the ef­fi­cient us­age of fi­nances by di­rect­ing spare funds from the pub­lic to en­ter­prises to de­velop their busi­ness op­er­a­tions thereby en­abling them to in­crease their pro­duc­tiv­ity and cre­ate more em­ploy­ment op­por­tu­ni­ties.

CBL Mar­ket Risk and Devel­op­ment Head Matsabisa Thamae said the cam­paign to en­cour­age com­pa­nies to list on the bourse was “promis­ing”.

“So far there are no se­cu­ri­ties listed in the stock mar­ket. Many en­ter­prises that we have ap­proached in­di­cated the need to raise fund­ing for their busi­nesses and some have re­sponded in a pos­i­tive man­ner.”

He said most of the com­pa­nies they vis­ited were pri­vate firms ad­ding that the con­ver­sion to a pub­lic com­pany was a process that took some time.

Mr Thamae said a num­ber of com­pa­nies were keen on list­ing debt se­cu­ri­ties since it did not take as much time as rais­ing eq­uity.

A debt se­cu­rity rep­re­sents money that is bor­rowed and must be re­paid, with terms that de­fine the amount bor­rowed, in­ter­est rate and ma­tu­rity/re­newal date. Debt se­cu­ri­ties in­clude gov­ern­ment and cor­po­rate bonds, cer­tifi­cates of de­posit, pre­ferred stock and col­lat­er­alised se­cu­ri­ties.

Con­tin­ues on Page 18 . . .

CBL Fi­nan­cial Mar­kets Di­rec­tor Bohlale Phakoe.

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