Trading Equities in Africa

The overall worth of equity trading in Africa is represented by the combined market capitalization of its stock exchanges, which is approximately $1.6 trillion as of 2022. This figure reflects the total value of all listed companies across the continent's 29 stock exchanges, with varying levels of development and market activity.

In this X Space, we explored trading equities in Africa with Patrick Edem Agama. Head of Trading and Business Development, Republic Securities.

Host: Brif Africa on X

Speaker: 🎤 Patrick Edem Agama. Head of Trading and Business Development, Republic Securities

It's safe to assume that we'd like to be wealthy at some point if you aren't already. More young people are finding innovative ways of making money, and trading equities, as I've come to find out, is one surefire way of making your money work for you. Intrigued? Let me take you through a quick recap of the gems Patrick dropped in this life-changing Spaces to get you started, or to regine your existing trading strategies. He highlighted the best season to trade, the pivotal role it can play in achieving your financial goals, and practical tips you can apply to make your money grow!

Quick recap

Equities (stocks/shares) allow you to own part of a business and, with that, grant you an opportunity to grow with it. They're mostly traded in the capital market, which is geared for the long-term focus. 

Some of the ways you can benefit from equities trading include:

• Capital gain. Buy low and sell high. 
• Dividends. Earn a share of the companies’ profits when payment of dividends is done. 
• Short selling. Sell equities you expect will drop in value, then buy and replace them when they do

Note* Some markets don't allow shortselling

*Tip Drop

To thrive in equities trading, follow well-worn philosophies. Think Warren Buffet, a world renowned investor

Additionally, it's crucial to embrace fine-tuned strategies and conduct the necessary research in diverse market segments like IT, banking, and more. The stock market is a dynamic landscape, and by investing wisely and staying informed, you can make the right decisions that yield substantial returns. 

*Tip Drop

Any company you think is performing well, there likely exists an exchange that can grant you access to its stocks. This circles back to a previous Spaces, where Temi mentioned that a simple hack you can employ when thinking of stock to invest in, look at products/services you use daily

Drivers in The African markets

• Dividends(main).  When companies perform well, they reward their investors with dividends, which makes this very appealing for potential shareholders
• Sector Performance. For example, the banking sector in Ghana is receiving considerable attention from investors. 

Currently, most of the African markets are owned by foreigners, which is quite disheartening. It could be we lack the proper understanding of how the markets work, and the potential it holds to grow our wealth, hence the underappreciation. Let's change that and take advantage of our markets. 

Also, if interested in investing in foreign markets, you just have to meet their requirements and register as a foreign investor.

There are licensed dealing members who ease you into the onboarding process, including:

• Amber Securities Limited • Black Star Brokerage Limited • Bullion Securities Limited • CDH Investment Holdings • Constant Capital Limited • Chapel Hill Denham Securites Ghana Limited • Databank Brokerage Limited • EDC Stockbrokers Limited • Firstbanc Brokerage Services LTD. • IC Securities Ghana LTD • Laurus Africa Securities LTD • NTHC Securities Limited • Petra Securities Limited • Republic Securities • Sarpong Capital Markets Limited • SBG Securities LTD • Serengeti Capital Markets Limited • SIC Brokerage Limited • Strategic African Securities LTD • TEAK Tree Brokerage LTD • UMB Stockbrokers Limited (UMBSL) • Worldwide Securities Limited

• Exchange rate depreciation concerning the US Dollar. This influences the value of your money

How to win in trading equities in Africa

• Know your risk tolerance. This affects your stock selection
• Check the dividend yield of a stock over time, its potential over time, and if it is satisfactory to you, 
• Financial goals. Choose stocks that align with your financial objectives. For instance, some companies only pay dividends when they've made a profit, others take the assured capital appreciation route with time over dividends payment. The choice is yours
• Cross-listed stocks. You are allowed to move across markets if it's cross-listed in several markets. Advantageous as markets communicate. 
• Professional advice. Seek advice from brokers and market players, especially with the exchange rates and foreign markets.
• Timing is everything. Know when best to move: buy and/or sell. Pick the right stocks, at the right time
• Do the work. Learn as much as you can about market patterns, sector and stocks performance, and key economic indicators.

How to access African markets

Patrick took us through the various wags we can access the equities market, both locally and internationally.

• International Brokerage options. Through their brokers, you can tap into the global markets Compare the pricing options and onboarding requirements to choose the best option.
• Utilizing tools like Bloomberg that have live information on market performance
• Websites that track African markets
• Exchanges Websites. African Exchanges have websites where there are lists of active licensed brokers and what they can/can't do

Some Trading Advice from Patrick

• Take Calculated Risks. Stock market trading is risky, but it is trained to be a long-term profitable venture. 
• News and Past Performance of stocks don't guarantee stock performance.
• Set Targets. Know when to hold, and when to sell. 
• Unlike crypto, stock trading is good for sustainable growth 
• Buy stock at the Right Time. The best time to buy equities is when things are about to get better, when the market is ripe to grow

Why Equities Trading is your Potential Wealth Builder 

This is a very profitable venture, provided you put in the work. As Patrick mentioned, it's an often overlooked cash cow in Africa, and it's about time we take advantage of our markets and grow together. Embrace working strategies, and you'll unlock a way to grow your wealth sustainably

Let's make money! Let's grow rich ~ Patrick Edem Agana

A big s/o to Patrick for this and the many more nuggets of wisdom he bestowed upon us, and in case you'd want to embark on equities trading, he’ll be glad to be of assistance!

To get a more in-depth explanation of this enriching discussion, check full session here. Interact with us in our ever-growing community and let's keep learning and earning! 

See you out there 😉