MASERU SECURITIES MARKET (MSM): UNTAPPED ECONOMIC POTENTIAL
Capital Markets: A Gateway to Growth
Capital markets offer a viable solution for Lesotho companies seeking to raise funds for expansion or working capital requirements. By listing equity or bonds on the Maseru Securities Market, business- es gain access to a broader pool of funds through investors, enabling them to raise capital more efficiently and at potentially lower costs compared to traditional bank loans. The two main channels of raising funds from the market, currently, is by issuing an initial public offer (IPO) and raising a Bond instrument.
Listing Equity: Unlocking Owner- ship Opportunities
Listing equity on the Maseru Securities Market allows companies to sell shares. The shares are the units of ownership participation in the company. In issuing shares, the existing owners exchange their interests in the company for funds with investors in exchange for capital. This not only provides immediate funding but also fosters a sense
of ownership and alignment of interests between companies and investors. Additionally, listing equity enhances corporate transparency and credibility, attracting investors and potentially increasing the company's valuation over time.
Listing Bonds: Accessing Long- Term Capital
Companies with long-term financing needs, require listing bonds on the Maseru Securities Market. This is a form of loan capital for a specified time tenure. It is a medium that offers an attractive alternative to bank loans. Bonds provide a means for corporations to borrow funds from investors in exchange for periodic interest payments and repayment of principal at maturity. These options avoid dilution of the share or capital interests of existing shareholders. Moreover, the bond market is well-regulated, providing investors with confidence in the security of their investments. The advantage of investing in bond is that the agreed interest in guaranteed.
Regulatory Oversight and Investor Protection
The Maseru Securities Market operates under the regulatory oversight of the Central Bank of Lesotho, ensuring adherence to strict standards of transparency, fairness, and investor protection. Corporations listing on the market benefit from a regulated environment that instills confidence in investors and promotes market integrity.
Professional market players
The key professional players in the capital market are the dealers and brokers. Securities and finance dealers and brokers buy
and sell securities, stocks, bonds and other financial instruments, and deal on the foreign exchange, on spot, or on futures markets, on behalf of their own company or for customers on a commission basis.
They recommend transactions to clients or senior management. Hence, they are the advisers you need to guide you on your in- vestment journey. They are the investors' partners in progress. The role of the brokers and dealers, technically; the broker places an order for the exact number of shares the client wants to buy or sell. A dealer orders for itself first, and then may resell some of those shares to other investors outside of the market.
Conclusion: Embracing the Golden Capital Market Opportunities
In conclusion, listing equity and bonds on the Maseru Securities Market offers Lesotho corporations a pathway to growth and prosperity. By tapping into the capital market, businesses can diversify their sources of financing, access long-term capital, and enhance their credibility with investors.
As Lesotho's economy continues to evolve, embracing capital market opportunities will be crucial for unlocking the full potential of businesses and driving sustain- able economic growth. Investing is an effective way to put your money to work and potentially build wealth. Smart investing may allow your money to outpace inflation and increase in value. The greater growth potential of investing is primarily due to the power of compounding interest and the risk-return trade-off.
The "Business and Investment Guide" column serves as a beacon of financial empowerment for Basotho investors and be- yond. Each article offers valuable insights and practical advice to navigate the complexities of wealth management, empowering all to seize opportunities and build resilient financial legacies. Stay tuned for more educational explorations tailored to the needs of the visionary investors.