Mr. Sushil Jain former Company Secretary of Seprod Ltd and a Member of the Board of Directors at Mayberry Investments Ltd was the guest speaker at the JSE Stock Market Game presentation ceremony. This presentation is a must read for all Analysts, Researchers and Educators. Please see Mr. Jain presentation below, it will be a pleasure reading it.
It is of paramount importance that analysts have an in depth knowledge in respect to listed companies’ operations, plant and machinery, products, people, management, marketing, pricing, corporate governance, risk management, insurance, compensation systems, research and development policies. Analysts also need to have full understanding of the companies’ Non Financial Performance Indicators and macro economic factors which can affect the future prospects of the companies.
Having acquired the requisite knowledge of the companies’ performance, it is important that the analysts conduct a SWOT analysis in order to effectively analyze the future prospects of those and prepare reports highlighting both financial and non financial performance indicators. Comparing highlights with the competitors and the international benchmarks, giving a forecast of the companies’ noting that investments are for the future and providing sound, reliable recommendations to the investors. These recommendations should have clarity and conviction.
Analysts should be able to generate public’s interest (both large and small investors) in the stock market by highlighting success stories of long term investments in stock (e.g. what has been the return for persons who invested in some stocks say 10 to 20 years ago). It is the analysts’ responsibility to highlight the dangers of investing in some companies which may be highly leveraged, not having appropriate policies in place such as corporate governance, risk management, etc. in order that investors can make informed decisions. Investors also need to have a scorecard of an Analyst’s recommendations over the years.
Analysts should be active participants in Annual General Meetings of listed companies in order for them to acquire first-hand knowledge of the companies’ performance They should go prepared with pertinent questions in order to glean critical information about various aspects of the companies.
Analysts need to be aware that they are the eyes and ears of investors. Consequently, it is their responsibility to highlight the problems that investors experience in executing trades, costs of trading, cost of transferring stocks, transmission of shares, lack of nomination facilities, etc as they arise from time to time. Development of a vibrant stock market is important for the economic growth of the country. Analysts can play a very important role in promoting the growth of a healthy and vibrant stock market.
