A stock exchange is simply a market place.
The history of stock exchanges dates back to the thirteen century. In 1262 the Government of Venice in Italy, unable to repay its temporary forced loans, converted them into a permanent National Debt in the form of bonds. These bonds could be traded in the market place.
The idea slowly spread and in 1693 King William III established the English National Debt. The brokers of the Royal Exchange would match buyers and sellers of these bonds.
The brokers would meet to conduct their business in a coffeehouse called Jonathan’s and in 1773 they decided that the place should be known as the Stock Exchange.
Some of the romance associated with the Stock Exchange originates from these times. Because of the type of companies whose shares were traded, such as the East India Company, Bank of England, South Sea Company and The Africa Company a strong sense of new adventures and new places developed. The brokers mainly bought or sold on their own behalf, or on behalf of very wealthy people, andthat led to the perception that the stock market is only for the rich.
It is interesting that even today many people believe the stock market is a place of mystery and is only for wealthy people. This is not so. Today, anyone can easily trade on the stock exchange through a stockbroker.
The idea of establishing a stock exchange in Papua New Guinea dates back to 1975. Numerous studies and investigations were undertaken and countless number of papers presented by economic commentators, government advisors and organizations.
In 1980s, the Government established the PNG Holdings Corporation, a business arm of the Government that was tasked to oversee the privatization of State-Owned Enterprises and the establishment of a stock exchange. It was envisaged that SOEs would be sold and traded on the stock exchange.
It was not until 1994 that the Government established a Stock Exchange Steering Committee to oversee a project on the development of a stock exchange in PNG.
In 1997, the Companies Act 1997 and Securities Act 1997 were passed by Parliament, paving the way for a securities market to be established.
The stock exchangeopened its office on 28 April 1999and Securities Commission approvalon 4 June 1999 enabled commencement of live tradingon the electronic trading platform. PNGX is now a privately owned company and is not owned by Government.
In December 2017 the new Capital Market Act 2015was introduced designed to further develop the capital market in PNG.
40 years later, the vision for SOEs to be sold and traded on the stock exchange has still not been achieved.
The major aim of PNGX is to provide a venue for the mobilization and raising of national and international capital for the long-term benefit of the citizens of Papua New Guinea and international investors. PNGX is important to ordinary people because they can buy a small number of shares in a company and they can be part of the launching of new companies in PNG.
Investing on PNGX is an investment option that allows people to use their money productively rather than holding them in a savings account. It means that companies that need money to start or grow a business can get people to buy shares in the business. Most of all, it gets more money flowing within the economy and creates growth and wealth.
A healthy and active stock exchange is good for the people and economy of PNG.
The information in this article is general in nature and you should take care to inform yourself about the specific characteristics of a particular investment before making a decision to invest in it. PNGX recommends discussing your investment objectives and needs with a stockbroker or qualified financial adviser.
By following these articles and reading more information available on the PNGX website (www.pngx.com.pg) you can build your wealth and invest in PNG.
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