Introduction

Introduction Wealth begins with better knowledge SEM is a strong supporter of the drive of bringing the stock market within the reach and understanding of the general public, and has a vision to develop an investment culture in Mauritius. Understanding the stock market and the principles of investing are increasingly becoming important as more and more people join the ranks of investors either directly or indirectly through a managed fund.

The number of investors trading on SEM has steadily increased over the years, on the back of the bull run that characterised our market during the 2002-2008 period, international roadshows in which SEM and brokerage houses have actively participated as well as broader investor education undertaken in Mauritius by SEM over the years to bring the stock market activities closer to Mauritian households.

In June 2011, the CDS register of investors included some 60,000 retail investors, representing nearly 10% of the working population. Investors growingly look at the stock market as a vehicle that allows them to achieve their long-term financial goals, while providing them with the flexibility of managing their investment portfolios.

Investment on the stock exchange is sometimes wrongly perceived as a highly technical matter, restricted only to professionals and financiers, and too complex for the average person to venture into. Nothing is further from the truth. You too can play a part in the process of wealth creation and earn a financial reward from the potential market growth.

An investment on the stock market provides the investor with two types of potential returns: 1) dividend income, and 2) capital gains. However, it is also important to understand that an investor may also lose money and see the value of his investments decline over time as a result of drops in share prices. Consequently, before investing in the stock market you should be clear about your own financial position and what you hope to achieve with your investments. Your regular financial commitments should be covered and provision made for unexpected expenses.

Having done this, you are ready to consider investing the surplus in shares.

People often ask about the key to wealth and the answer is quite simple. Knowledge is the solution. Shares are an important part of any investment strategy and the SEM hopes you will find this booklet helpful in enabling you to learn about the stock market and become a successful investor.