At the same time, the democratisation of the financial markets and the rise of fintech companies have made online investment more accessible and affordable for everyone. Coupled with Africa’s growing internet penetration, this is very encouraging for potential investors as a stable internet connection is crucial for online trading, order execution and market analysis in general.
With a strong presence in Africa over the past year and an FSCA licence under its belt from the South African regulator, one of the biggest market players offering access to trade currencies, cryptos, commodities and more online, is Exness.
Exness is a global multi-asset broker known for being the first to surpass the $1 trillion mark in monthly trading volume by its clients. Their strategic expansion plans will cover countries like Uganda and Rwanda in 2022, where anyone with a serious interest in accessible and affordable investment options can benefit from the broker’s innovative technology and excellent trading conditions.
Exness, being both a fintech company and multi-asset broker, invests heavily in developing technologies, algorithms and products that will result in fast execution, stable pricing, and low to zero commissions and spreads, in addition to features that give traders an extra layer of protection during volatile markets.
Bridging the cultural divide
The main characteristics that make a nation unique have to do with ethnic make-up, social habits, language, religion, health, and education; it is inevitable that these will in one way or another influence most aspects of one’s life. Each of these elements plays a particular part in behavioural patterns, way of thinking and decision making; investing is no exception to this rule.
An investor’s attitude to risk is usually associated with their wealth, job security, and the potential for local currency depreciation. Having this in mind, you might conclude that two people from entirely different cultures and countries will invest similarly if their economic situation is the same. However, this is only partly correct. The whole concept of investment starts within communities and individual households, built on the foundation of the societal norms that surround them and constitute the fabric of their culture.
A study by Mei Wang and Marc Oliver Rieger, professors in behavioural finance, shows that cultural background influences investment behaviour, even when inflation rates and wealth are taken into account. Traditionally some societies tend to be more risk-averse than others, which is reflected in the make-up of the overall economy. One example is “Ego-traders”, who are usually situated in the United States. Another is investors in Nigeria, who tend to risk more capital when confident of a positive outcome. African investors, in general, prefer well-diversified portfolios with a mix of financial instruments.
Multi-asset broker Exness offers exactly that. With a product offering that covers currencies, cryptos, precious metals, energies, stocks, indices and more, Exness provides the perfect solution for a well-diversified portfolio under some of the best trading conditions that can be found in the market. Moreover, the broker offers products and services tailored to every region depending on geographic behaviour, popular asset classes, and numerous other factors. As mentioned earlier, Exness is licensed and regulated by the South African FSCA, among other global regulators, and offers trading accounts denominated in more than 65 currencies.
As such, clients don’t need to pay any conversion fees when they deposit or withdraw funds from their trading accounts. Multiple local payment and withdrawal methods are also available, such as MyBux or Mobile money for clients in Uganda and Rwanda.
Also popular in the African region are gold and oil, both of which are available to trade with Exness. The most historical of all emotional connections between cultures and specific asset classes is the one that exists with gold. There is a cultural affinity between the precious metal and countries such as Ghana and South Africa, the two largest gold-producing countries in the continent. The two countries dominate the gold-mining industry in the region and Ghana ranks as the sixth largest gold producer in the world.
Of note is also the recently greenlit East African Crude Oil Pipeline, that will transport oil from the Ugandan oil fields to the Port of Tanga in Tanzania. This will be the largest heated oil pipeline in the world, spanning over 1,440 kilometers, and will help position Uganda as one of the largest oil producers in Africa.
The African continent holds vast natural resources including huge reserves of precious metals, oil, and natural gas. Rwanda is also one of the world’s largest exporters of tin, tungsten and tantalum and exports gold and gemstones as well.
Thus, oil and gold are commodities that are heavy in demand in the region - both as a hard asset and as an investment vehicle.
The coronavirus pandemic has already played out differently around the world according to individual cultures. The majority of investors globally have responded by increasing their trading activity significantly, not least because most people were quarantined at home for months, with more time on their hands to trade.
According to Terence Hove, SSA Market Analyst at Exness: “Numerous factors such as those mentioned above do to some extent affect how market participants approach online trading and investing. However, as financial markets have become more integrated through advances in technology and easy access to information that is critical for decision making, the playing field is now more level than ever before.
In addition, with electronic payments in Rwanda growing by more than 400% during the Covid-19 pandemic and coupled with reputable payment platforms such as WorldRemit and the recent entry of Nigeria’s digital payroll platform, Bento, into the market, this is a strong signal of sound financial payment systems available locally. As traders need to make transactions to and from their digital accounts or wallets, having access to reliable local payment systems is crucial to perform these actions seamlessly.”
Investors don’t necessarily have something to learn from their counterparts in other countries, but understanding cultural differences in trading behaviour can certainly point them to opportunities they haven’t considered before.
For more information about Exness and to sign up for an account, visit www.exness.com
To take a look at what Exness has been up to in Africa, follow its Instagram and Facebook channels.
Terence Hove, is a Market Analyst at Exness for the SSA region.