A very warm welcome to the readers of this monthly Stock Market Awareness column! Here, current and potential investors can look forward to relevant and key information about investment opportunities and returns in Fiji’s stock market and how one can start investing in a SPSE listed company.

Unlisted companies and corporate advisors can also access information in this column about listing your company on the SPSE and the benefits that this could offer. This month, we will focus on investment basics and a Q&A with a SPSE-listed company.

Before we get into the finer details of Fiji’s stock market, the Investor Education Team at SPSE thought it best to begin with a primer that answers a number of commonly asked questions that we receive from the non-investing public, some of whom have since become active stock market investors

Licensed Stockbroking Firms

• Kontiki Stockbroking Ltd
• FijiStock Brokers Ltd
• FHL Stockbrokers Ltd

What is the difference between saving and investing?

People generally use these two words interchangeably, thinking that they mean the same thing. There is a difference.

Saving involves simply setting money aside for future spending. It is usually put in a safe place that is easily accessible by you, whether under your mattress or in a savings account at a commercial bank.

Investing is when you use your savings to purchase a financial product or something of value with the intention of earning a good return and growing its value overtime.

When should/can I start investing?
It is often said that one can start investing as and when they please and that you’re never too young or too old to start. While that is true, it is critical to think through the following points first before you actually make the decision to start investing:

• Outline your current financial situation — set your expenses against your income and identify whether you have surplus funds available for investment or not. You cannot become an investor until you have mastered the art of saving!

Identify your investment objectives — what are you saving and investing for? What do you want to achieve and when do you want to achieve it by?

• Outline whether you are investing for a short-term or long-term period
• Identify whether you are investing for income, growth or both
• Identify how much risk you are prepared to take to earn returns

What can I invest in through the SPSE?
There are many types of investments available in Fiji. These include term deposits, bonds, real estate, insurance products, unit trusts and shares. These investments are all different in nature and offer varying returns.

In Fiji’s stock market you have a choice of 17 well-known Fijian companies that offer shares and convertible notes which you can invest in. These companies are listed on and regulated by the SPSE.

What is the minimum amount that I can invest?
There is no restricted minimum amount to invest but an investment worth only $100 will not be very practical as transaction costs (including brokerage and SPSE fees) can be a significant percentage of smaller amounts.

How do I buy shares/convertible notes in SPSE listed companies?

If you have been seriously thinking about investing in Fiji’s stock market and you’re now ready to buy shares/convertible notes of a company listed on SPSE, you can begin your investment journey by:

Contacting a licensed stockbroker of your choice. There are three in Fiji and they’re licensed and regulated by the Reserve Bank of Fiji;

• The Broker will have a chat with you to understand your investment preferences and then recommend a selection of listed company shares for you to choose from. Make the most of this opportunity to ask the stockbroker as many questions as you’d like that will help you in choosing the investment that is right for you;
• After you have made your investment choice(s), the broker will ask you to complete a user-friendly Buy-Order Form clearly identifying the shares you want to buy, the quantity and price. The broker will contact you when they have found an investor that is willing to sell their shares to you at the quantity and price you specified.

 
What are Shares and Convertible Notes?
Shares are a type of investment that gives investors a fraction of ownership in a company whereas Convertible Notes are a type of investment that starts off for a specified period of time as a loan to a company (during this period the investor receives fixed interest payments)  and then converts into shares of the company.

• Returns from shares and convertible notes come in two forms:
• Dividend return – paid by the company out of its profit (paid to shareholders)
• Interest return – fixed percentage return paid by a company at regular intervals (paid to noteholders)
• Capital gain/loss – increase or decrease in the value of the share/notes over time

Dividends paid by listed companies to residents are TAX FREE and any gain an investor makes from the sale of SPSE listed company shares is exempt from Capital Gains Tax.

Feedback: rachnal@fijisun.com.fj