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The challenges of expanding the investor base in the securities market

Heriwalter Domingos


One of the fundamental factors for the strength of any securities market is the consistency in terms of investments resulting from the quality of its investors.


The majority of doctrine has defined an investor as a natural or legal person, governed by public or private law, who participates in the securities market with the aim of valuing their savings and assets.

Without prejudice to the Securities Code approved by Law nº 22/15 of 31 August (hereinafter CódVM), not conceptualizing the investor, based on the principle of exclusion of the parties, we can classify investors as institutional and non-institutional entities in accordance with their level of competence and experience in relation to securities and derivatives.

The expansion of the investor base for the securities market is an ongoing process that requires a lot of discipline and commitment at all stages, thus creating a shared responsibility between the main market players.

Certainly in the spectrum of factors that provide an insight into the base of investors in the securities market, the number of custody accounts at the Central de Valores Mobiliários de Angola (hereinafter CEVAMA), occupies a top place as the main indicator for the respective analysis.

In this context, since the opening of CEVAMA in 2016 until February 2022, there was an increase in the number of investors in the BODIVA markets by around 8774.16%. Thus, for that period, 85,588 custody accounts were opened, representing an average of 12,227 per year.

Accordingly, the base of investors in the BODIVA markets, from the point of view of the number of custody accounts at CEVAMA excluding the closed accounts, is currently 26,445. Certainly, some factors were relevant for the respective expansion of the investor base, including: (i). The quality and quantity of information on financial education conducted by the main market players; (ii). The launch of the Investor Portal and (iii). Compliance with BNA Directive No. 03/DMA/2021 (Migration of the Securities Portfolio of Non-Bank Entities from SIGMA to CEVAMA).

Source: BODIVA (Monthly Report)

Despite the significant growth in the number of custody accounts at CEVAMA, thus allowing a reading of the number of institutional and non-institutional investors in the BODIVA Markets, it is essential to pay attention that the number of investors may not represent the quality of investors, that is, the fact that there are currently around 26,445 custody accounts opened at CEVAMA, does not objectively mean that all natural or legal persons invest in the BODIVA Markets, in other words, the objective interpretation is that the opening of the custody account ends up being the "Business Card", in the BODIVA markets, that is, having a custody account at CEVAMA, any natural or legal person is entitled to invest.

The process of expanding the investor base in the securities market materially entails two challenges:

  • The impact of financial education actions: The prelude to any approach to broadening the investor base is fundamentally based on financial education. In this way, the size of the investor base is proportional to the respective level of financial education of a given population.

         Accordingly, the supposed complexity in terms of the entry process of new investors in the securities market is basically summed up in the absence of basic fundamentals on financial education, resulting mainly from factors exogenous to the market;

         Notwithstanding the various financial education initiatives conducted by the Capital Markets Commission, BODIVA and its Members, the moment the Angolan securities market will soon enter will certainly require the implementation of financial education actions at two speeds: (i). Demystify the popular elitist idea of ​​the securities market; (ii). Make up for lost time by strengthening the foundations of financial education at the grassroots.

  • Process of simplifying the opening of custody accounts at CEVAMA: The process of opening custody accounts at CEVAMA and the fact that it is carried out in most cases, through the branches of BODIVA Members, may in some cases be pointed out as an inhibiting factor for the respective adhesion by potential investors.

         In this context, it is essential that the institutions responsible for the process of opening custody accounts at CEVAMA, specifically BODIVA Members, adopt the spirit of simplification in order to eliminate any bureaucracy channel in the process of opening the respective accounts.

Thus, the process of simplifying the opening of custody accounts at CEVAMA should be limited to three aspects: (i). Continuous training on the securities market at Branches or first line of contact with potential investors; (ii). Standardization between the opening of the current account and the custody account (When opening the current account, the investor must know that he is equally qualified to invest in Mercados BODIVA, and the custody account will be opened at the same stage) and ( iii). Creation of mechanisms that allow greater autonomy to potential investors in the markets (Home Broker).

In view of the above, the challenge of expanding the base of investors in the securities market should allow not only the number of investors, but fundamentally the quality of the respective investors. In this context, objectively, the resilience of investors and boldness in terms of investment, has as a metric the quality that they present in the market.

Opinion of
Heriwalter Domingos

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