Maravi

Ndhlovu bemoans speculative activities in capital markets

Ndhlovu bemoans speculative activities in capital markets
By Kabanda Chulu
Tuesday May 13, 2008 [09:00]

LUSAKA Stock Exchange (LuSE) chairman Friday Ndhlovu has expressed concern over the increase in speculative activities that are creating a downward turn on the LuSE all share index. And Ndhlovu has dismissed assertions that the speculative activities could be a result of insider trading on Zambian capital markets.

During a media briefing yesterday in Lusaka, Ndhlovu said there was an increase in the activities of speculators in the market especially since the Copperbelt Energy Corporation listing that has led to panic selling by other investors.

“In turn this has created a downward turn on the LuSE all share index and we would like to encourage investors to review their investment positions and transact over the exchange in accordance with their own investment strategy and not hearsay,” Ndhlovu said.

“While share prices may rise or fall, the gains or losses are only realised when investors sell their shares, hence reactive decisions may not necessarily be in the best interest of the selling or buying investor.”

He said over the last six weeks, the market had noticed increased activity whereby investors were exiting from one listed entity to acquire shares in the opportunities.

“The impact of this has been an overall reduction of the LuSE share index from 4,649 in March 2008 to 3,902 this month May, thus resulting in a 16 per cent decline,” Ndhlovu said. “However, we want to assure the public that the market will realign itself once the ongoing corporate action has settled and we hope that new listings will enhance liquidity and provide investors with additional options.”

When asked if the speculative activities were fuelled by insider trading, Ndhlovu said there was no insider trading on the Zambian capital markets.

“Speculation should be avoided because it affects the share index since investors exit anyhow but there is no insider trading and all decisions are based on public information,” said Ndhlovu. “And since it does not exist, there are no measures in place to prevent it.”
Insider trading is when people inside capital market institutions such as LuSE and stockbrokers disclose information not supposed to be known by the public, resulting in speculative buying.

Labels: FRIDAY NDHLOVU, LUSE

posted by MrK @ 11:28 AM