The executive director of the Association of Stock Exchanges of the Dominican Republic, Mario Franco, commented that despite the fact that Dominicans do not know everything that involves the stock market, its growth has been accelerated.
“Those who have already gained experience through investment knowledge or because they understand how it works in other markets are taking advantage of the stock market and from 2016 to date we have had an average growth of 26%, which means that the securities that are invested have an average annual growth of 26%,” he said.
He assured that the niche that does know about the functioning of the stock market in the country knows that it is not being invented or improvised, because they know all the rigor with which it operates and the legal framework that supports it.
What is the stock market?
He explained that the stock market is nothing more than a financing mechanism through which companies or the State itself turn to it when they need financing, where individuals and companies from both the public and private sectors participate as investors.
“The stock market is nothing more than a complementary financing mechanism, through which companies have access to capital at different terms and other conditions that better fit their cash flow,” Franco explained during his participation in the program Reseñas, hosted by journalists Rafael Núñez and Adelaida Martínez R. on Entelevisión every Saturday at 9:00 p.m.
He pointed out that there are “many” requirements to access a loan in the stock market and noted that it is a highly regulated and highly supervised institution and that this is done precisely for the purpose of ensuring that investors, who are the ones providing the money, have the assurance that the company has complied with an extremely rigorous process.
The stock market has two parts: companies and the State that seek financing and on the other hand, an ecosystem made up of entities such as stock exchanges, the Superintendency of Securities, the Stock Exchange, the Centralized Securities Depository and risk rating agencies, which allows both investors and those seeking financing to interconnect.
“Stock exchanges are specialized entities that advise entrepreneurs to tell them what type of financing is best for them according to their business model. Afterwards, a whole process is carried out and submitted to the Superintendency,” explained the executive director of the Association of Stock Exchanges in the Dominican Republic, who added that investors then see this so that they invest in the debt in exchange for a return.
Legal framework: regulation of the sector begins in 2000
There are currently 15 stock exchanges in the country, and it was with Law 19-00 of 2000 that the stock market in the Dominican Republic began to be regulated, even though it existed long before.
“It is a young market, from a regulatory point of view, that same law, after being 17 years old, in 2017 was modified by a law that was a little more dynamic, more open, which in fact orders the development of 16 regulations for each specific actor within the stock market, and later, in 2021 we have another law that modified, among other things, the Tax Code to allow the public issuance of shares.
He recalled that the César Iglesias company was the first in the country to take advantage of this financing mechanism where it did not have to go into debt or resort to a loan, but instead took a portion of its share capital and converted it into shares available for the market.
Diversify your investment
On whether or not to migrate from the banking sector to the stock market, Franco said that it does not necessarily mean migrating completely, because the strategic thing would be to diversify one’s portfolio, leaving part in banking and investing another in the stock market to have more options.
Mario Franco called on people to understand that the stock market is not reserved for the rich, since any citizen can open an account with up to RD$10,000.00, using as an example someone close to him who works with his family, opened his own brokerage account and has become so passionate about it that he is now a businessman.
“The first investment you should make in the stock market is time. Know it, know what you are getting into, not because of the risk you are taking, but because of how interesting the stock market is, because you will become an entrepreneur without realizing it,” Franco urged.
He stressed that anyone interested in learning about the stock market should go to one of the 15 stock exchanges and obtain information on the matter, because joining the market is not so easy, since it seeks guarantees in the processes. He took the opportunity to inform that on the Association’s website (www.apb.org.do) there is free training for anyone interested in the world of the stock market.
