A Beginner's Guide to Investing on the Zimbabwe Stock Exchange (ZSE)

Part 1: Understanding the Basics

Before you invest your first dollar, it's crucial to understand what you're getting into. The stock market can seem complex, but the core ideas are quite simple.

What is a Share?

When you buy a share (also called a stock or equity), you are buying a tiny piece of ownership in a company. If that company does well and its value grows, the value of your piece of ownership—your share—also grows. Companies like Delta, Econet, and CBZ are listed on the ZSE, and you can become a part owner of them.

How Do You Make Money?

There are two primary ways to make money from shares:

1. Capital Gains: This is when you sell your shares for a higher price than you bought them for. For example, if you buy a share for $100 and sell it a year later for $120, you've made a $20 capital gain.
2. Dividends: These are small, regular payments that some companies make to their shareholders out of their profits. It's the company's way of sharing its success with its owners.

Step 2: Choosing a Stockbroker

You cannot buy shares directly from the ZSE. You must go through a licensed and registered stockbroker who acts as your intermediary. This is the most important relationship you will build as an investor.

What to Look For in a Broker:

• Registration: Ensure they are officially registered with the Securities and Exchange Commission of Zimbabwe (SECZIM) and are a member of the ZSE.
• Online Platform: For convenience, choose a broker that offers access to an online trading platform like ZSE Direct. This allows you to manage your investments from anywhere.
• Fees: Understand their fee structure. Brokers charge a small commission on every trade (both buying and selling).

Step 3: Opening Your Trading Account

Once you've chosen a broker, you'll need to open a trading account. This process is similar to opening a bank account and is designed to comply with financial regulations.

Common Requirements (KYC - Know Your Customer):

• Completed Application Form: Provided by the stockbroker.
• Copy of your National ID or Passport.
• Proof of Residence: A recent utility bill (ZESA, council rates) or an affidavit.
• Proof of Income: A recent payslip or bank statement.

For Zimbabweans in the diaspora, most brokers have a process for submitting certified copies of these documents.

Step 4: Your First Trade via ZSE Direct

ZSE Direct is the ZSE's own online trading platform that allows individual investors to buy and sell shares easily. Your stockbroker will help you get set up on it.

1. Fund Your Account: You will first need to transfer money into your trading account. Your broker will provide you with the necessary banking details.
2. Choose Your Shares: Research the companies listed on the ZSE. Look for businesses you understand and believe have good long-term prospects.
3. Place a "Buy" Order: Through the ZSE Direct platform, you will place an order to buy a specific number of shares in your chosen company at the current market price.
4. Confirmation: Once your order is executed, the shares will be transferred to your electronic account, which is held at a Central Securities Depository (CSD). You are now officially a shareholder!