America the great economic super power became what it is today thanks mostly to capitalists. Especially ambitious and determined entrepreneurs and investors , who in most cases, with nothing more than a dream and the hunger to succeed built multi-national corporations through thorough planning, sound investment decisions and also by taking risks. To begin with these large corporations did not start as large corporations but started as small scale family businesses and many of the founders were probably dead when their businesses became the large corporations they are. With careful planning and clear vision and mission the founders, and afterwards their successors, were able to make their businesses grow from the small family enterprises they began as to the large multinational corporations there are today. An important factor that allowed these businesses to grow was capital, and a major source of this capital was the stock exchange. Over time as the companies grew and their owners saw it was necessary to raise extra capital for the expansion of operations they decided to list their companies on the stock market and sell shares to the public to raise capital. The stock market is a capital market for raising long term funds by companies and I would like to emphasize two issues that are wrong with our Malawi Stock Exchange; 1. Malawians who own medium scale business, which could expand and become large corporations fail to do so either because, they do not understand that the stock exchange offers a cheap source or raising capital, or they do understand but they may prefer to keep their business a family business and therefore would not want to dilute ownership of the business. 2. Malawians invest in the stock exchange for the wrong reasons. Investing in a listed company is supposed to be a long term thing, because the investors returns are the dividends the company pays out, and shares are a financial asset whose value is added to an individualâ€™s estate and net worth and can therefore be used as collateral when obtaining a bank loan. What instead happens is that; Malawians are only interested in buying shares when a company has an Initial Public Offer (IPO), (when a company list on the stock exchange for the first time)when the share price is quite low and then selling a few weeks later when the price has gone up. This sort of trading is not too helpful because there is too much supply as compared to demand and eventually the price of the shares goes down, taking with it the value of the company and its ability to pay a good dividend, having a negative effect on long term investors, and deterring potential investors. Malawians really strive to fully understand the stock exchange and the role it plays in the economic development of a country, especially a small economy like Malawi where sources of capital are scare and investment opportunities rare.
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