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How To Invest in the Eswatini Stock Exchange in 6 steps

1. Pick a Broker

Brokers are the authorized intermediaries to trade financial assets on the Eswatini Stock Exchange. There's currently 2 approved StockBrokers available: African Alliance Eswatini and Swaziland Stockbrokers.

2. Open a Trading Account with the Broker

The investor is expected to fill in the forms and provide the necessary Know Your Investor (KYI) documents. The Broker is expected to also set a Cash Account for the investor by way of selecting the clients’ bankers and stating the clients banking details. The broker will provide you with access to their investment platforms, allowing you to send purchase and sale orders to the central system of the Eswatini Stock Exchange.

3. Choose the Asset in which to invest

The investor has to decide whether to invest in shares, sovereign bonds or corporate bonds.

4. After making a decision, send a Buy order via the Broker

Submitting a purchase order for a financial asset. It is possible to set a limit price or a market price of the selected asset.

5. The transaction is completed once buying and selling prices match

When the bidding price of an asset equals the asking price, the trade is executed. The Brokers makes the transaction payment at the Stock Exchange in your name, and they deliver the transaction amount to the buyer / seller broker. You become the legal owner of the asset.

6. The Broker issues the transaction notification and charges their fees

There is no fixed fee, which means that when choosing a broker to invest in the Eswatini Stock Exchange, it is important to choose the one that can better adapt to the investor's personal situation.

How does the Eswatini Stock Exchange work?

What is the Stock Exchange?

Based in Mbabane, the Eswatini Stock Exchange was founded in 1990 and is the main Stock Exchange of the country.

In short, the stock exchange is the institution that facilitates the negotiation of financial instruments in Eswatini. Supply of financial instruments such as stocks, bonds, currencies, and the demand for these instruments (i.e. investors) interact here.

The Stock Exchange holds daily "Trading Sessions", for which it provides the physical, technological, human and operational means that allow efficient communication between Brokers, Issuers and Investors.

What is a Securities Issuer?

Issuers of securities are companies that seek to grow through raising capital at the Eswatini Stock Exchange. These companies raise capital by issuing debt (bonds) or capital (shares). Issuers of securities may be government controlled entities or private companies, but no matter who owns the company, it is the issuer who backs the investment.

For example, if you invested in bonds from a private company, it is the company the one that will be required to pay the principal and interests to the bond investors. By May 2020, the Stock Exchange has 7 listed shares: Swd Empowerment, Royal Swazi Sugar, Nedbank, Swaprop, SBC Limited, Greystone Partners and Swazispa Holdings.

How is a Trade completed in the Stock Exchange?

A trade, or, in other words, the investment flow of any financial instrument, could be summarized as follows:

1. Sellers (supply) offer to sell a financial instrument at a price, for example, shares of Swaprop company. Sellers aim to make this price as high as possible (Price 1).

2. Investors (demand) who wish to buy the shares, make an offer for a price. They want this price to be as low as possible (Price 2). Then, Price 1 is greater than Price 2.

3. Buyers interact with sellers, until they are at the point where Price 1 equals Price 2. When this occurs, the financial transaction is completed and the shares are exchanged between the seller and the buyer. In order for this interaction to occur, a Broker is needed: A company that has the role of mediation between sellers and buyers, ordering prices and quantities of  financial instruments. Below we explain the services that these companies provide.

What is a Broker?

Transactions of financial assets can only be completed through a company that works as an intermediary between investors and sellers. These intermediaries are known as Brokers.

Through complex technological tools, brokers manage transactions between investors, ordering the purchase and sale orders of financial assets by price and by order of arrival, and by performing this service, they obtain a commission when, for example, executing the operation of buying a share.

Brokers are, then, market intermediaries, companies in which buyers and sellers interact and come together to buy stocks or bonds at the negotiated price.

In order to invest in the Eswatini Stock Exchange, an investor then needs to open an account with a local Broker.

International Brokers operate easy-to-use apps that allow you to buy and trade financial assets (like US Stocks, Commodities, Indices) on any device.

International Brokers operate easy-to-use apps that allow you to buy and trade financial assets (like US Stocks, Commodities, Indices) on any device.

Investing in International Financial Assets [From Eswatini]

As we have mentioned many times in this guide, trading of financial assets must be done through a Broker. In the case that you decide to open an account with a broker who trades in the Eswatini Stock Exchange, you will be allowed to trade locally listed assets only.

If you in turn decide to open an account with an international Broker, you may invest in countless international assets. In other words, you can invest in international financial assets such as stocks listed on the New York Stock Exchange from Eswatini through an international Broker.

The job of an international Broker is to connect their clients with international Stock Exchanges. In other words, if a client intends to buy Apple shares (which are listed in New York), the broker buys it for the client, and deposits it in the client's trading account. In general, almost all major Brokers provide access to Exchanges from the United States, Canada, the UK, Japan, Switzerland and Europe.

Opening an account with an international broker is usually an online process, and you can operate in the international financial market from your phone in just a few days.

Best Brokers to Buy International Stocks available in Eswatini

This article will help you start investing, from the minimum amount of money required to open an account to some ideas to consider in your portfolio.



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