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Monday, July 02, 2007

More Fijians investing in the stock market

The Capital Markets Development Authority (CMDA) says that more indigenous Fijians are investing in the unit trust and stock markets compared to other ethnic groups.

CMDA said that about 64% of investors in the unit trust market are indigenous Fijians while other residents comprised 36%.

The analysis done by CMDA is interesting is that it may mean the following :
  1. confirms that indigenous Fijians are passive investors who when they do invest leave their investments as they are for years without active monitoring of the investment's performance and the markets;
  2. Fijians are still not very well educated in terms of finance and financial matters hence the reliance on professional fund managers, such as unit trusts, to manage their investments for them;
  3. other races in Fiji use their own savings to set up their own businesses rather than give it to others to use (such as that done by indigenous Fijians);
  4. viewed from a different perspective, the above point could also suggest that Fijians are funding the businesses owned by other races (e.g. investment in businesses majority owned by other races which are listed on the South Pacific Stock Exchange, Suva, Fiji).

Further analysis may need to be done by the CMDA to dig into what is behind the statistics it has given out.

Read the commentary on CMDA's review in a Fiji Times article below.



"More Fijians invest in stock market, Saturday, June 30, 2007

More indigenous Fijians are investing in the unit trust and stock market compared to other ethnic groups, says the Capital Markets Development Authority chief executive Suren Kumar.

Mr Kumar said market statistics showed that about 64 per cent of the investors in the unit trust market are indigenous Fijians, while other Fijian citizens and residents comprised 36 per cent.

Mr Kumar said the new trend for Fijians towards investing was heartening and should be supported. "Apart from individuals, a substantial number of provincial and tikina-owned companies, vanua and communal groups also invest in the unit trust and stock market," he said.

Mr Kumar said this as the CMDA launched the Fijian version of "Investing for retirement" (Na vakatubu i lavo me baleta na tiko marau ena gauna ni vakacegu mai na cakacaka) and another booklet, Why should you invest (Na cava na vuna mo vakatubu I lavo kina) this week.

He said financial literacy was fundamental to market development.

This corresponds with the Bureau of Statistics 2002-2003 Household and Income Expenditure Survey which indicates that in aggregate, indigenous Fijian households are saving some 18 per cent of their incomes with little differences between the major ethnic groups.

However, Mr Kumar said the same report highlighted that only 13 percent of indigenous Fijians over the age of 54 considered themselves as retired compared to 26 per cent to 28 per cent of other Fiji citizens.

"These statistics support some of our concerns and initiative to translate and publish the Fijian version of 'investing for retirement' as the statistics indicated some indigenous Fijians could not retire completely because of their financial obligations to their families and communities," he said.

He said there w as a greater need for more indigenous Fijians to plan for their retirement earlier in their working lives.

"We hope many will take advantage of these publications and take time to learn fundamentals and seek advice from licensed advisers, brokers or unit trust representatives before making any investing decision," he said."

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