An analysis of training in the semi-gilt securities market

Abstract :

The capital market provides the mechanism whereby the current savings of the private sector are channeled through financial intermediaries to the public sector for investment in productive facilities. In this regard the capital market performs an important role in the optimal allocation of scarce investment funds. The capital market comprises mainly government securities (gilts) and municipal and public corporation securities (semi-gilts). This study will be limited to the semi-gilt market, in particular, the stocks of Escom and the principal municipalities, namely Cape Town, Durban, Johannesburg, Port Elizabeth and Pretoria. The capital market consists of a primary market for new issues, as well as a developing secondary market. A considerable amount of trading takes place in “over the counter” deals between the institutions but deals concluded on the Johannesburg Stock Exchange have increased dramatically since stockbrokers were allowed to deal as principals in July 1978. The allocation of savings and the flow of funds in the economy are discussed, as well as the role of financial intermediaries in aiding the flow. In addition, the role of the capital market in financing investment is considered. Holders of semi-gilt securities are mainly the institutions, namely, long and short-term insurers, pension funds, banks, building societies and the Public Debt Commissioners. Major issuers of these securities are the public corporations and the public authority institutions. A brief description is given of the functions of each of these institutions. Also the effect of the statutory requirements regarding prescribed assets is discussed. The trading patterns of the most actively traded stocks are illustrated graphically. An attempt is made to identify factors which influence the volume traded. Multiple regression analysis is used to determine the significance of these factors. For purposes of this analysis, the dependent variable is volume traded, while the independent variables are nominal issued capital, maturity date and yield to maturity. Indications are that in the case of Escom stocks, active trading is related to the size of the issue. Large issued capitals enhance tradability and promote the development of the secondary market. The maturity date and the yield to maturity are not significant factors influencing the volume traded. When the above factors were applied to the five principal municipalities and tested for significance using multiple regression, it was found that these factors are insignificant in determining the volume traded.

 

Details

Author Jacobson BI
URL http://hdl.handle.net/20.500.11892/51768
Date Accessioned 2016-09-22T09:16:04Z
Date Available 2016-09-22T09:16:04Z
Date Created
Identifier URL 1982
Language English
Subject Business administration / Business leadership
Subject 2 Business administration / Business leadership
Alternative Title
Degree Type Masters degree
Degree Description  MBA