01 / 15
Welcome to the Stock Market
🏢 ↔ 📊 ↔ 👤
Companies and investors meet in the stock market.
You have already learned what investing means and the difference between
saving and investing. Now it is time to understand where share investing
actually happens.
The stock market is a marketplace where shares and other securities can
be bought and sold according to established rules.
It connects companies that need capital with investors who want to invest
their money.
Simple idea: The stock market helps buyers and sellers
come together to trade investments.
02 / 15
Imagine a Marketplace
🏪
A normal market brings buyers and sellers together.
Think about a market in your town. A seller brings goods to the market,
and people who want those goods come to buy them.
The stock market works on a similar basic idea, but instead of buying
tomatoes, clothes or other physical goods, investors trade financial
securities such as shares.
There are rules, systems and organisations that help make this market
operate.
A stock market is a financial marketplace, not a physical shop where
you walk in and pick a share from a shelf.
03 / 15
What Is a Share?
🏢
Company
→
📄
Shares
→
👤
Investors
A share represents a unit of ownership in a company.
When a company has shares available for investors and you buy some of
those shares, you become a shareholder.
Your ownership may be very small compared with the entire company, but
you are still an owner according to the shares you hold and the rights
attached to them.
Share = a unit of ownership in a company.
04 / 15
Why Do Companies Sell Shares?
🏢
Company
→
💰
Capital
→
🏗️
Growth
Businesses need money to operate and expand.
A company may need capital to build new facilities, buy equipment,
expand its operations, develop products, enter new markets or support
other business activities.
One way a company can raise capital is by issuing shares to investors,
subject to the applicable rules and requirements.
Investors provide capital because they hope their investment will provide
a future financial benefit.
05 / 15
Who Are the Buyers?
👩🏾 👨🏾 👨🏿 👩🏿
Different types of investors can participate in markets.
People who buy shares are called investors or shareholders after they
become owners of shares.
Individual people can invest. Large institutions such as pension funds,
insurance companies and investment funds can also participate in financial
markets.
Each investor has different goals, financial resources and risk tolerance.
Some may be investing for long-term wealth creation, while others may
have different investment objectives.
06 / 15
Who Are the Sellers?
👤 → 📊 → 👤
One investor can sell while another investor buys.
After shares have been issued, investors may buy and sell shares with
other market participants through the market's trading system.
For example, one shareholder may decide to sell shares because their
financial goals have changed. Another investor may be interested in
buying those shares.
The market provides a system through which these transactions can take
place.
The person selling a share is not necessarily the company that originally
issued the share.
07 / 15
The Company and the Stock Market
🏢
Listed Company
↔
📊
Stock Market
↔
👥
Investors
A company that has its shares admitted to trading on a stock exchange
is generally described as a listed company.
Once listed, the company's shares can be traded by investors through
the market under the exchange's rules.
Listed companies also have continuing obligations to provide information
and make required announcements to the market.
Being listed means a company's shares can participate in an organised
public market.
08 / 15
What Is the Lusaka Securities Exchange?
🇿🇲 📊
Lusaka Securities Exchange — LuSE
Zambia has its own securities exchange known as the
Lusaka Securities Exchange, or LuSE.
LuSE provides an organised marketplace for trading listed securities
under its rules and systems.
For a Zambian investor interested in learning about shares listed in
Zambia, understanding LuSE is an important part of understanding the
local stock market.
LuSE is Zambia's securities exchange.
09 / 15
How Does a Share Trade Happen?
👤
Investor
→
🏦
Broker
→
📊
Exchange
→
👤
Another Investor
An investor generally does not simply contact the company and ask it to
sell them shares whenever they want.
Investors normally use an authorised or licensed intermediary, such as
a stockbroker, to place orders according to the market's procedures.
The order can then enter the relevant trading system where it may be
matched with an appropriate order.
10 / 15
What Makes a Share Price Move?
📈 ↕ 📉
Prices can change as buyers and sellers interact.
A share price is influenced by buying and selling activity in the market.
When buyers are willing to pay more and demand is stronger, the price
may rise. When more investors are willing to sell and buying interest
is weaker, the price may fall.
Many things can influence investor decisions, including company results,
news, economic conditions, expectations and investor sentiment.
A rising share price does not automatically mean the company is good,
and a falling price does not automatically mean the company is bad.
Investors need to investigate the reasons behind market movements.
11 / 15
A Simple K10 Example
Imagine a Share Trading at K10
Suppose a share is trading at K10.
You are interested in buying 100 shares.
If your order is successfully completed at K10 per share, the value of
the shares before transaction costs would be K1,000.
Later, another investor may be willing to buy the shares at a different
price, depending on the market conditions and available orders.
This simple example shows why the market price of a share can change.
The actual transaction price depends on the orders and trading conditions
at the time.
12 / 15
The Stock Market Is Not a Casino
📚 + 🔎 + 📊
Investing should be based on understanding and research.
Some beginners think the stock market is simply a place where people
guess whether prices will go up or down.
That is not a good way to understand investing.
When you buy shares, you are buying an ownership interest in a business.
A responsible investor should learn about the company, its business,
financial position, risks and future prospects.
Think like a business owner, not someone looking for a quick gamble.
13 / 15
Why Is the Stock Market Important?
The stock market can play an important role in an economy.
💰
Investors
→
🏢
Businesses
→
📈
Growth
It can give companies access to capital and provide investors with an
opportunity to participate in business ownership.
A healthy capital market can support business development and help
mobilise savings into productive investment.
The stock market connects investment capital with businesses that need
capital to operate and grow.
14 / 15
What Should You Remember?
- The stock market is a financial marketplace.
- Shares represent ownership in a company.
- Companies can raise capital through shares.
- Investors can buy and sell shares.
- Listed companies participate in an organised market.
- LuSE is Zambia's securities exchange.
- Stockbrokers help investors place trades.
- Share prices can move up and down.
- Investment decisions should not be based only on rumours.
- Learning about the company is important before investing.
Key idea: The stock market provides an organised way
for investors and businesses to participate in the buying and selling
of securities.
15 / 15
🎓
Lesson Complete!
Well done! You now understand what the stock market is and why it exists.
You have learned how companies, investors, brokers and the stock exchange
fit together.
Remember:
The stock market is a marketplace for securities.
Shares represent ownership in companies.
Investors can buy and sell shares through the market.
And in Zambia, an important part of this market is the Lusaka Securities Exchange.
Before putting your money into the market, keep learning and understand
what you are buying.
