Survey of investors on policy of development of stock market

Transcription

1 Survey of investors on policy of development of stock market

2 CONTENTS Foreword... 2 Survey methodology Sampling... Questionnaire... Data collection... Confidence level... Attendants Age and sex structure... Occupation and education... Stock exchange history... Evaluating broker-dealers Stock exchange experience... Does broker dealer companies provide sufficient information... Does investors think that provided information trustworthy... Reasons... Evaluating government involvement Satisfaction with Financial Regulation Committee operations Satisfaction with Stock Market operations Opinion on whether Government appointments are accurate Describing future of development Willingness to trade ETT stocks... Belief that stock market will develop... Immediate issues of stock market development... References

3 Foreword Financial market, especially stockmarket plays a key role in development of economy. Successfully developed stockmarket provides fair and low cost long-term investment opportunity to entrepreneurs. But today in our financial market, banking sector provides 95% of all investments and such short-term high-interest loans are weighing on our private sector and individuals. Regretfully, stockmarket - the other edge of the financial market is far behind in development. The fact that stockmarket is not developing in Mongolia is visible from annual decrease in total number of investors. In order to determine the reason for this failure of development, we have done a research using random sampling among investors trading in stockmarket actively. We hope that results of this research will provide good insight to all participants of stockmarket operation and help develop best policies.

4 Sampling Participants were selected through broker dealer companies. The number of customers of broker dealer companies were acquired from Stock savings centre via official request. To ensure fair representation of customers, the companies were divided into 4 groups and equal number of representatives were gathered through random sampling. Number of participants by broker companies Standard Investment Gauli Bidisec Ard capital Gatsuurt trade Ard securities Bloomsbury securities Tenger capital TDB capital Golomt securities Novel Investment Monkhan Trade Monsec Global assect Altan khoromsog MICC Ondorkhaan invest Zerged Delgarkhangai securities DCF Goodsec Ace and T capital Asia pacific securities

5 Preparation of Questionnaire Questionnaire consists of 31 questions within 5 sections. That is information on investors, information on stock traders, stock trading experience, opinion about customers, opinion on involvement of government agencies in stock market, further tendencies in stock market, opinions on development policies. Questionnaire was developed by Spoonmedia LLC in collaboration with Stockmarket Traders' Association. Questionnaire questions by sections Stock trading experience Evaluation of Stockmarket Satisfaction with operation of government agencies Opinions on development policies Information about participants Date of trading of first stock Name of first stock traded Familiarity with companies' financial statement Belief in financial statements Total investment in stock Trading frequency Broker companies' ability to provide information Belief in information from broker companies Reason for doubt Type of information needed Name of serving broker company Number of serving broker companies Problems with opening and closing accounts Familiarity with agencies that oversee financial statements Satisfaction with Financial Requlatory Committee operation Satisfaction with Mongolian Stock Exchange Approval of privatization of Mongolian Stock Exchange Opinion on whether Government agencies' appointments are accurate Belief whether ETT stock will become profitable Willingness to trade ETT stock Evaluation of current stockmarket conditions Problems facing stockmarket development Belief in stockmarket growth potential Ideas about stockmarket development Age Gender Education Occupation Location 4

6 Collecting Information Questionnaires were developed using Google Forms and were sent to s of investors through stock-trader companies. Investors were notified about the questionnaires by phone and the questionnaires were filled. Information gathering continued from September 13 th to October 7 th, Daily number of questionnaires filled /13 9/20 9/27 10/4

7 Confidence level Majority of participants are active traders. Number of individuals and organizations in Mongolia that have traded in last years are Sample consists of 4 foreign, and 156 domestic stock traders. The sampling represents the total pool of traders with confidence interval of ±7.6% with 95% of certainty. Number of Stock-Traders, by thousands Domestic Foreign '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 Source: Mongolian Central Securities Depository

8 Gender, age diversity The fact that majority or 68% of participants were males, is connected with characteristics of the stockmarket. Participants' age of matches with population pyramid of Mongolia. Population pyramid of questionnaire participants Male Female

9 Education, occupation Majority of participants had tertiary education. 59% of participants work in private sector. Occupation of participants Education level among questionnaire participants Works for private company 59% Works for government 16% Businessman 15% Student 4% Works for NGO Unemployed 3% 2% Tertiary 95% Veteran 1% 8

10 Stock exchange 69% of participants belong to a group of investors who purchased stocks worth above 5 million. Stock investment Up to tugriks 69% tugriks 11% tugriks 5% tugriks 4% tugriks 3% More than tugriks 7% 9

11 Stock exchange 56% of participants were involved in stock trade during this year. 45% of participants acquired their first stock one year ago. This shows sampling represents new and active traders. Time of first stock purchase Frequency of trade Last year 45% Once in a few years 30% Once in a year 18% 5 years ago 33% Weekly 12% Once in a 6 months 11% 10 years ago 12% Once in a 3 months 11% Once in a month 11% 20 years ago 10% Daily 7% 10

12 Experience in stock exchange Investors rarely familiarize themselves with financial statements. Only 57% of questionnaire participants were familiar with a finanical statement of a joint-stock company. Investors have low confidence in financial statements of joint-stock companies. 32% of participants expressed medium confidence in financial statement. Familiar with financial statements Confidence in financial statements, 1-5 point scale 32% No 43% 18% 25% Yes 57% 12% 13% Low High 11

13 Satisfaction with broker companies Broker companies do not supply investors with necessary information. 73% of participants assigned below average points on information supply. Investors expressed their interest in timely information about companies and more detailed information about market. Do broker companies supply valuable information? Information needed Timely information about the company 27% 35% Detailed information about market 26% 24% Financial statement of the company 26% 15% 15% Political decisions that could affect the company 11% 11% Information about macro economy 5% Others 5% 12 Barely Indeed

14 Satisfaction with broker companies Information supplied by broker companies is insufficient. 68% of participants assigned below average points on quality of information supplied by broker companies. Reason for distrust in supplied information consists in lateness of the information, and the fact that the information is copied from newspapers and also the fact that the broker companies do not cooperate with their customers. Do you trust in information supplied by broker companies? Reason for doubt 41% Insufficient information 44% Joint stock companies cannot be trusted 17% Knowledge of employee wasn't good 14% 22% Own experience of bad case 8% 16% Regulations are loose 6% 10% 10% Information was out of date 6% Weak customer relations 6% 13 Disagree Agree

15 Satisfaction with broker companies Majority of investors expressed will to have internet platform and solve the problem associated with opening and closing an account. It is not common to trade with several broker companies. 71% of investors trade with only one broker company. Problem with opening and closing an account Number of broker companies traded with No internet platform 58% One 71% Too much bureaucracy 18% Void of information 12% Two 24% Too dependent on broker company 4% No branches in rural area 3% Three 3% Commission fee is high 2% Four 1% Regulations are loose 2% Performance isn t good 2% Five 1% 14

16 Opinion about operation of Government agencies Half of investors are aware of the subject that must oversee financial statements of joint-stock companies and assigned highly unsatisfactory grade to the operation of Financial Regulation Committee. Name subject that oversees financial statement of jointstock companies Grade the operation of Financial Requlatory Commission Financial regulatory commission 47% 36% 32% 29% Investors 24% Stock exchange 24% Central securities depository 5% 2% 1% Poor Excellent 15

17 Opinion about operation of Government agencies Investors are dissatisfied about the operation of Mongolian Stock Exchange. 86% of participants assigned below average point. Majority or 89% expressed approval of privatization of Mongolian Stock Exchange. Does Mongolian Stock Exchange provide timely information? Does Mongolian Stock Exchange need privatization? If it does, what percentage? 38% Denial 11% 25% 23% Complete privatization 36% Minor share 23% 10% 4% Major share 30% Disagree Agree 16

18 Satisfaction with Government agencies' operation Government agencies' assignments are unsatisfactory. Only 4% of participants stated that government agencies assign right people to official posts. Are appointments of government agencies appropriate Agree4% Don t know 22% Hadly 49% Tottally disagree 25% 17

19 Opinion on stockmarket development policies More than half of participants think that ETT will be profitable and express willingness to trade ETT stocks. Do you believe ETT stocks will be profitable? Are you willing to trade ETT stocks? No 40% No 48% Yes 60% Yes 52% 18

20 Opinion on stockmarket development policies Participants expressed opinion that current situation in Mongolian stockmarket is very bad. None of the research participants assigned good grade to current situation. Nevertheless investors think that further development of stockmarket is possible. Evaluate current situation in stockmarket Will stockmarket develop? 46% 38% 35% 21% 23% 19% 11% 6% 0% 0% Insufficient Decent Negative Positive 19

21 Opinion on stockmarket development policies Investors stated lack of government policy as a reason for inability of stockmarket to develop. Following ideas were expressed as a solution: decrease of Government's involvement in stockmarket, privatization of Mongolian Stock Exchange, improvement in tax envirnoment, development of a good product, improving financial education of main population. What is the biggest problem standing in the way of stockmarket development? What is the solution? No government policy 33% Implement government strategy 38% Public knowledge about the market is poor 21% Fundamental economic institution is poor 18% To educate public 22% Absence of good product 8% Develop new good products 20% Macro economic performances are poor 8% Will of broker dealer companies are poor 5% Expand capacity of involving agencies 16% Legal environment is poor 3% No tax policy 3% Develop online infrastructure (platform) 4% 20

22 Opinion on stockmarket development policies...2. Acquiring an investment for big projects through Mongolian Stock Exchange 3. Exchange Erdenet GOK, and State Bank stocks through Mongolian Stock Exchange... Male, privatization not through bidding, but through a public trade on secondary market... Male, supporting companies that are rleasing a stock on stockmarket by offering tax freight and giving a motivation for creating new products Male, 35 21

23 Opinion on stockmarket development policies Weakening the monopoly of banks Male, 38 Providing the public with good information, making sure that everybody has an idea about a stockmarket Female, 36 FRC to have skillful head and employees. 100% privatization of Stock exchange, Centreal Securities depository Male, 24 22