Now Reading
The Importance of Communication in the Capital Market: Reflections on the Mozambican Context

The Importance of Communication in the Capital Market: Reflections on the Mozambican Context

  • Wilson Tomás • Analyst & Research at Banco Big Moçambique

It is widely recognised that financial markets play a crucial role in the proper functioning of economies, influencing resources and generating liquidity for companies and entrepreneurs. These markets facilitate the transaction of financial holdings between buyers and sellers, creating securities products or assets that provide a return for those with surplus liquidity and make that liquidity available to those in need of funding.

In the primary market, issuers make financial instruments available to interested investors, while in the secondary market, investors can sell all or part of their previously purchased instruments. The question arises: what causes the volatility in the prices of financial instruments that we see on the markets?

Information is fundamental in the financial markets. Company announcements, economic reports and central bank decisions all have an impact on asset prices. Efficient communication allows this information to be transmitted quickly and accurately to investors, traders and financial institutions, who depend on accurate information to make their investment decisions. News, analyses and reports are therefore essential for assessing the investment environment and rationally deciding on resource allocations.

Effective communication in the financial markets also provides insights into risks and opportunities. Information about future events, regulatory changes and economic developments helps participants to anticipate and manage risks associated with their investments. Trust is crucial in financial markets, and transparent communication contributes to building confidence among participants. Therefore, companies, financial institutions and regulators that maintain effective communication build a good reputation in the market. Credibility is therefore very valuable in the financial markets, and the way an organisation communicates can influence the perception of participants.

Modern communication in the financial markets allows investors to access a variety of information sources, including real-time news, expert analyses and research reports. Artificial Intelligence (AI) and other technologies play a significant role in transforming the information landscape, offering efficiency, personalisation and advanced insights, although they raise ethical questions and challenges related to trust, privacy and algorithmic control.

Modern communication in the financial markets allows investors to access a variety of information sources, including real-time news, expert analyses and research reports

According to the efficient market hypothesis proposed by economist Eugene F. Fama, financial markets are efficient in relation to information. Eugene Fama, winner of the Nobel Prize in Economic Sciences in 2013, is widely recognised as the “father of modern finance”, and his research into the relationship between risk and expected return has transformed finance. According to Eugene Fama, the formation and evolution of the prices of financial instruments on the capital market depend on the efficient circulation of information. Prices contain information that justifies the direction they will take and investors must pay attention to communications in order to make informed choices.

In Mozambique, the capital market is in a growth phase, with 16 companies listed on the Mozambique Stock Exchange (BVM). However, in-depth work is needed to improve the efficiency of this market. Information is scarce and shared infrequently throughout the year. To stimulate greater participation and make instruments more liquid, companies need to communicate more frequently with investors, stimulating appetite and contributing to a sharper growth of the capital market, which is crucial for the business sector and economic growth.

See Also

SUBSCRIBE TO GET OUR NEWSLETTERS:

Scroll To Top

We have detected that you are using AdBlock Plus or other adblocking software which is causing you to not be able to view 360 Mozambique in its entirety.

Please add www.360mozambique.com to your adblocker’s whitelist or disable it by refreshing afterwards so you can view the site.