The main words that make the market sound convoluted are those that give a general description of the market, and those that describe the trading status of the counters.
Market performance and movement is generally described by the Day’s turnover, the market capitalization and the Index. Market turnover captures the worth of the shares transacted by computing the number of shares traded on a particular counter at the days trading price. This is then added up to give the total market turnover. Market capitalization captures the market worth by computing the total issued shares at the days trading price per company, a summation of which gives the total market capitalization. The index is a measure of market movement. The market has identified 20 active counters whose percentage price movement is calculated on a daily basis.
Trading status is described by an ex or cum status of company following a corporate action. Shares purchased at cum status implies that the investor qualifies for corporate action while an ex status implies that the investor does no qualify.
Corporate actions include dividends distribution, where the company shares profits with shareholders, Bonus, where the company distributes bonus shares at a certain rate to shareholders, rights, where the company sells additional shares to shareholders at a certain rate and at a discounted price, and Splits, where a companies shares are split at a certain rate like the one recently done on E.A Cables.
Understand the price list
The pricelist is the document that translates the market performance on a daily basis and is the document that the bourse uses to report the day’s happenings. The price List is divided into the different market sectors and captures the following information;
-Each company’s 12 month high and low, that is, the highest and lowest price that the shares have traded over the last 12 months. This is adjusted any time the price hits a new high or low.
-The company’s trading status following the Announcement of a corporate action
-The highest and lowest price that the shares traded at on the day’s trading
-The average trading price for the day which is a weighted average of the different prices captured on the counter.
-The previous day’s average price
-The number of shares that changed hands over the trading period
-The fixed income section
-The day’s general performance including the Index, Market cap and Market Turnover
-Recent announcements, corporate actions and effective dates
The pricelist analyses he market on a daily basis and is thus a very important tool for any market participant.
Learn how to interpret company announcements
Each company releases the half and end-year performance at least two or three months after the end of the reporting period. All banks and some industrial and commercial counters report as frequently as quarterly. The reports usually outline the company’s performance over the period in review, a summary of reasons attributed to this performance, any corporate action declared by directors, management outlook on the coming period.
You thus need to know companies reporting periods and approximate time that companies release their results as this is one major driver of the demand /supply balance on the market. You also need to be able to interpret the released results, and analyze this against the previous comparable period. This way, you get to understand the company better and even compare its performance with other companies in the industry.
Visit the trading floor
If you are within the proximity of the Stock Market, make a point of visiting and spending a few minutes watching the trading taking place. Being there as the action takes place helps you get a feel of what really happens on the market. If you had already paid a visit in the just ended open outcry environment, then make a point of visiting in the new automated environment and watch the prices match.
2 comments:
Thank you again hisagal. just a 2 questions;
1. Do you have any information on the sale of govt's extra stake in Mumias. have they decided on the time, method etc?
2. What of Sameer. they were to cross list in TZ and UG. do you have any news on it yet?
Odeglenyang,regarding the government's reduction of its stake in Mumias, this is to be done through a public offer implying a possible discounted price. This is targetted at being done around December or in the first quarter of next year.
Sameer voiced their intention to have there shares cross-listed but have not yet given the exact dates. This will largely depend on the time the authorization proceedure will take.
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