High schools and universities play the JSE Investment Challenge
The 44th JSE Investment challenge is underway, in which students get virtual portfolios, of varying risk, worth R1m to ‘play’ with
The 44th JSE Investment Challenge, which exposes high school and university students to the markets and investing, got under way this week. The challenge aims to dispel the perception that one needs to be a millionaire or of a certain age to invest in the stock market.
Ralph Speirs, the JSE’s corporate social investment officer, said the project was an invaluable source of financial knowledge for students who would not ordinarily be exposed to the market.
"It’s an empowering opportunity to help the youth understand what wealth is," he said, adding that the initiative gave the students an advantage by getting them involved in the stock exchange at a young age, enabling them to capitalise on the compounding effect.
A Human Sciences Research Council study on financial literacy in the country found that only 4% of South Africans invested in trusts, stocks, shares, livestock or property as a form of saving. The study, conducted in 2012, revealed that less than half of all adult South Africans were familiar with unit trusts, provident funds or investment policies — "signaling, perhaps, that much of the population does not think about investing or saving at this level".
The challenge is open to learners from all study fields. Participation in the challenge increased by 30% last year to 12,618 participants from 9,742 in 2015. The number of university participants grew to 3,103 from 2,776 in 2015. Most participants in 2016 were from Gauteng.
Speirs said the JSE specifically targeted schools in rural areas, such as Mdantsane in the Eastern Cape and Thoyandou in Limpopo, in an attempt to level the playing field for learners coming from underprivileged backgrounds. "There are learners who come from privileged backgrounds whose parents invest on their behalf and very often talk about the markets at the dinner table," said Speirs.
Due to inefficiencies in the schooling system, many rural schools do not have internet access. The JSE has provided alternative learning materials, such as manuals and DVDs, for students to equip themselves with appropriate knowledge on the companies. In each school, the JSE arranges for one teacher to guide participating students on their investments, equipping teachers with information through webinars.
There is also a mentorship programme running in some areas of the country, where university students from institutions such as Fort Hare and the University of KwaZulu-Natal go into their communities and mentor local children on investing.
Playing the game
The games began on March 13. High school teams of four and university teams of two to four are given a R1m virtual fund to start buying and selling shares.
In schools there are three investment portfolios students can play with, depending on how confident they are. The "income game" consists of only the top 40 listed companies and is less volatile. To play students need to have a minimum of R400,000 in the portfolio.
Students can choose to play the slightly riskier "equity game", which includes all listed companies; this portfolio requires a minimum of R250,000. Teams with an appetite for high risk can play the "spectacular game", which requires no minimum balance. This portfolio allows teams to invest in any listed shares, warrants or exchange-traded funds on the JSE and is restricted to internet trading only.
"It can be quite daunting but we divide the portfolios to allow first-timers to engage with brands that they know and understand," says Speirs. "Once they understand that, they can go onto the more detailed approach where they can look at smaller cap companies."
Teams need to make at least 10 transactions to be eligible for the annual prizes and there is a minimum brokerage fee of R75 per trade. A daily, monthly and annual scoreboard allows teams to see where they are in relation to the other teams.
The best-performing teams and schools in each portfolio win R500 per team member, R500 for the supervising teacher, and R500 for the school.
The university teams stand a chance to win a trip to a stock exchange overseas and a R25,000 cash prize. Last year’s Stellenbosch University team spent a week at the Australian stock exchange learning more about trading and growing investment portfolios.