THE BENEFITS FOR LISTING SECURITIES WITH THE DAR ES SALAAM STOCK EXCHANGE IN TANZANIA: INTRODUCTIONThis part provides the introduction to the capital markets. It is divided into four parts. The first part provides meanings to various common terminologies commonly used in administering securities. The terms include capital markets, stock exchange and listed companies. The second is the introduction to DSE. The benefits for listing shares are discussed in part three. Part four is the conclusion. This paper provides significant knowledge on the benefits, which investors will enjoy when so do in Tanzania. It gives thorough knowledge on the entire stock exchange market prior to physically visiting Tanzania. Thorough understanding of the merits and demerits on investment in a particular place is important in doing away with losses related to lack of information
Capital markets are facilities and mechanism through which funds move from idle holders to productive users. They are facilities which channel funds, at market price, to productive activities and they are divided into two inter-dependent segments namely primary and secondary markets. Primary markets are financial markets in which issues of securities are sold to initial buyers for the first time-Initial Price Offer (IPO). Initial Price Offer includes when the firms floats shares or its corporate bonds to the investors for the first time. Institutions liable for issuance of securities are those holding shares and that they are eager to raise funds for boosting their capital, among other reasons. Such institutions include the fourteen firms listed with Stock Exchange in Tanzania which include National Microfinance Bank (NMB), Tanzania Breweries Limited (TBL) and Kenya Airways (KQ).
Thus securities issued in primary markets are later traded in the secondary markets. Hence, secondary markets are financial markets, which deal with buying and selling of securities previously issued to and subscribed by investors in primary markets. Secondary markets are administered by formal institutions mandated for trading securities such as the Dar es Salaam Stock Exchange (DSE), Nairobi Stock Exchange (NSE), and London Stock Exchange (LSE). ). Therefore secondary market refers to a market to buy and sell securities already launched through the primary market.
Stock Exchange is an act of trading officially the stocks held by investors. It is converting securities into cash through formalized institutions such as DSE. A listed company is one whose shares are quoted and traded on a recognized major market such as the DSE. Listed companies have to provide a substantial amount of information on a regular basis about their trading and financial position. Normally, a company selling shares in an IPO will also seek a listing on an exchange or exchanges.