How to Trade Capitec Shares in South Africa?
In this article
Like most people, you might have wished to buy shares of a company that grows in value and can make you enough money so that you can retire young and live an abundant life.
Your first choice may have been Capitec bank stock when it came to buying growing stocks. The first question that comes into mind is how to trade Capitec shares? We have made it easier for you by explaining the profitability extent in buying Capitec shares and the steps to do it.
While investing can seem complicated at the time, there are ways to make it easier for you. Stock trading apps simplify investing and have made access to investing more accessible thanks to the removal of stock commissions.
Thus, you won’t be required to pay a commission for every trade you make. You can set aside money periodically to buy fractional shares through some investment apps, further lowering the barrier to investing in these stocks.
It is currently possible to purchase shares of Capitec bank online through low cost (or free) brokers. This article describes how to buy shares in Capitec, even though there are certain risks involved in purchasing its stocks at the moment.
You can read step three below to find out how to open a brokerage account and Trade CFDs on Capitec shares using the Plus500 CFD broker as an example.
What is Capitec?
Capitec is the 2nd largest retail bank in South Africa, with over 11 million customers providing various services like checking, saving, loans, and more. With its mobile banking service, an ATM network of thousands, and a commitment to simplicity, the bank has gained traction across South Africa.
For years, Capitec Bank’s shares have steadily increased in value. Since 2020, the company’s stock price has fallen more than 40% due to the Coronavirus pandemic. Is this a good time to trade Capitec shares in South Africa for traders?
Consider its share price and dividend yield when determining whether or not to include Capitec in your portfolio. Besides showing you how to trade Capitec shares online, we’ll also talk about two of the best South African brokers to use for the job.
Background of Capitec
Capitec was established in 2001 and has become one of South Africa’s fastest-growing banks, now employing more than 11,000 people and having more than 7.3 million clients.
The bank has been listed for sale on the Johannesburg Stock Exchange (JSE) since 2002 and has received excellent buy-in from clients of all income levels due to its affordability and simplified model of banking.
Currently, Capitec has a market cap of almost R70 billion, and it occupies 20% of the banking market in South Africa. Additionally, the bank opened branches on Saturday and Sunday for clients, the first time in South Africa.
With Capitec, you can bank more conveniently and easily, thanks to technology. Through Global One, the bank provides clients with integrated solutions to transact, save, and access credit in real-time. Clients also have access to business banking and money management services.
Now you are aware of the Capitec bank, so we can move on to buying its shares. We have provided a stepwise process to do so.
Step 1: Look for brokers who offer Capitec bank shares to trade.
Before we see how to trade Capitec shares online, you need to find a reputable broker. Capitec is listed on the Johannesburg Stock Exchange (JSE). The bank’s shares are available through most brokers on the JSE since it is such a popular stock.
Online brokers are not all alike, however. Brokers determine whether you can trade certain shares on the forex market.
As well as providing market information and technical analysis, your broker will assist you in research on investments. You need to choose the best broker in South Africa to trade shares there.
Let me highlight two brokers we recommend for traders in South Africa to make your search easier.
Plus500- Trade share CFD with no commission
Among South Africa’s brokers, Plus500 stands out for its value. There are no commissions charged on trades made through this brokerage, regardless of the amount.
With Plus500, the spread is the only fee, and it’s some of the lowest we’ve seen. For example, you can trade Capitec shares with a spread of less than 1.7%.
CFDs are the only instrument that Plus500 uses to trade shares. You can use leverage in that case, which is beneficial to traders. You can trade the Capitec Bank shares CFDs on margins as low as 2:1, and many shares are available for trading at margins as high as 5:1. In total, Plus500 lets you trade in more than 600 securities from around the world.
Users will enjoy Plus500’s user-friendly trading platform. Many technical indicators and studies are included in the charts, which are easy to understand for first-time investors. Plus500 may lack more experienced traders since it does not allow you to build custom studies or backtest a strategy.
Despite this, price alerts and an economic calendar are plenty useful to most South African traders. In addition to offering a good stock trading app, Plus500 provides live streaming news.
- Spreads are tight, and commissions are 0%.
- Capitec offers a leverage of up to 2:1.
- You can trade over 600 global equities.
- User-friendly platform.
- Economic calendar and price alerts.
- Trading applications for mobile devices.
- Custom indicators are not available on technical charts.
I.G – share broker providing an advanced trading platform
When it first entered the online trading world, IG was a leader in the traditional broker industry. Traders have access to markets worldwide, including South Africa, the U.S., and the U.K. You can also trade forex, commodities, and cryptocurrencies with I.G. in addition to CFDs for popular South African stocks like Capitec.
I.G. offers a surprisingly powerful technical analysis tool, which you may find especially attractive. Using ProRealTime, which integrates with the brokerage, users can create their technical studies by charting and testing.
As a trader, if you develop trading signals, you can then automate your trading strategy, set custom alerts, etc. Platforms can be a little challenging for first-timers, but advanced traders will benefit greatly from it.
A commission-free trading environment is offered by I.G., which does not charge monthly account fees. However, the spreads for shares in South Africa can be substantially higher than those at other online brokers.
Though there is a slight price increase with I.G., you shouldn’t let that deter you because the broker’s research and analysis tools are more than worth it.
- You can trade stocks, forex, and commodities.
- Trade real-time with ProRealTime.
- Customised trading signals.
- News and research of the highest quality.
- No commissions.
- Share CFDs with wider spreads than average.
- For beginners, trading platforms can seem complex.
Step 2: Conduct research on Capitec shares
This year has been challenging for Capitec’s stock price. After experiencing multiple consecutive years of growth, the Coronavirus pandemic sharply lowered the share price, leaving investors concerned about the bank’s financial condition.
Considering this uncertain environment, you must pay careful attention to Capitec’s share history and future growth prospects before investing.
History of the Capitec share price
In South Africa, Capitec is one of the largest financial institutions. It has more than 11 million clients and is the country’s second-largest retail bank. Capitec was enrolling more than 120,000 new customers each month just before the pandemic.
In large part, two offerings were responsible for the growth. One was mobile banking, which Capitec has heavily invested in. Most of the bank’s customers use its mobile banking app, which is easy to use.
Additionally, the bank offers the “Global One” account. You get all the benefits of a checking account and a savings account. Consumers in South Africa applaud the ease of using this unified, one-of-a-kind account.
Capitec’s customers are extremely satisfied. It has been highly rated by international rating groups and is rated as satisfying by 82% of respondents in a 2015 survey. The bank claims that 80% of Capitec’s customers pay monthly fees under 50 R.
Since the pandemic began, the share price of Capitec had been growing steadily on the back of growing enrollments and satisfied customers. In 2009, at the height of the financial crisis, Capitec’s shares were priced at just 3,100 R each, but by 2020, it was trading around 145,000 R each.
Over the last decade, this gain has exceeded 500%.
A pandemic of Coronavirus changed everything. Its price has been fluctuating between 85,000 and 95,000 R since it reached a low in March at just over 68,000 R. Since the lockdown began, the company has frozen its dividend and slashed earnings forecasts, leaving investors concerned about the potential loss of capital.
In 2016, Capitec began paying dividends twice a year, with ex-dividend dates in March and September. Even with the bank’s explosive growth, dividends have remained fairly consistent. As of March 2020, the yield is 8.41%, compared to 8.55% in 2016. A more than 8% dividend yield per year is certainly attractive, even without significant dividend growth.
Capitec, one of South Africa’s first major companies to suspend dividends, unfortunately, did so for the upcoming dividend (September 2020). This announcement came following guidelines issued by the South African government on how companies can conserve cash.
As of now, Capitec hasn’t announced a date when dividends would resume or whether dividend yields would remain the same.
Risk of trading Capitec shares
The risks of this company are important to consider before we dive into Capitec shares as a bargain purchase. Investors have targeted the company’s shares for a good reason.
Earlier this month, Capitec warned of a 70% decline in earnings in the year’s first half. In May, the company predicted a 20% loss, making this unusually dramatic for investors. Capitec’s credit impairment grew by more than twofold due to the Coronavirus, which held back loan repayments while the company was locked down.
Additionally, Capitec’s short-term future outlook is also bleak. By the second half of 2021, the company may no longer return to pre-pandemic earnings.
For investors willing to wait out short-term pain, Capitec could still be a good investment for the long term. Consider these two reasons why Capitec shares are a good investment right now to trade.
The future looks bright for Capitec
Although the pandemic has hit Capitec, its financial health is still good. There is, however, a temporary drop in earnings. Even though loan payments were delayed, they must still be made over the next few years. As the economy recovers in South Africa in 2021, Capitec’s earnings per share should rise.
The company is well-positioned to weather the storm in the meantime. To ensure its ability to survive financial crises, the bank undergoes regular stress tests. Moreover, Capitec has saved billions of dollars in cash by suspending its dividend, despite the move being unpopular with investors.
Capitec has been hit hard by the pandemic, but it holds a prominent physical presence in South Africa despite the outbreak. With over 500 retail branches throughout the country and nearly 3,400 ATMs, Capitec is one of the country’s largest banks. The lockdown isn’t resulting in a loss of customers but a temporary decrease in their use of the bank’s services, but that should improve as the economy improves in the coming months.
Banking for business could grow
Capitec also identified a potential opportunity with its grim loss announcement for 2020 – business banking. Small businesses that want to use Capitec’s services can now do so through its small business banking division. However, this market sector has plenty of potential, especially since small businesses will need assistance to recover from the current recession.
Because it already offers many small businesses’ services, Capitec is particularly well-suited to benefit from the South African recovery. Capitec offers mobile banking, retail branches, and POS solutions that are vital for business owners. Moreover, business owners will likely be attracted to the bank’s low fees and integrated checking, savings, and credit account offerings.
Step 3: Make a deposit into your account
Do you want to trade Capitec shares? Before you can get started, you must open a new brokerage account. Take an example of Plus500 to consider how to open an account to trade Capitec shares in the forex market.
Click on ‘Start Trading Now’ on Plus500’s homepage if you would like to open an account.
After creating a username and password, you’ll be directed to the next page. Input your name, birth date, and address next.
Furthermore, Plus500 requires that you upload copies of your driver’s license and passport, as well as your current electricity bills or financial statements. The purpose of these requirements is to ensure your identity is protected. You may skip this step for opening an account, but funds will not be withdrawn from your account until you confirm your identity.
A deposit into your account is necessary before you can begin trading. To deposit funds on Plus500, follow these steps.
- Debit card
- Credit card
- Bank transfer
- Wire Transfer
You must deposit at least $100(around 1650 R) when joining Plus500. Rand is not acceptable if you want to deposit money in the account; you must convert funds into USD or GBP first. With a $250 (4000R) deposit, you can get a trading bonus. Payments made by credit or debit cards are available immediately for trading.
You can open an account with any share broker by following similar steps. The moment you open a share trading account with a broker who allows Capitec share trading, you can trade Capitec shares.
Step 4: Trade Capitec Bank Shares
You may now trade Capitec shares after your trading account has been funded. You can search for Capitec in Plus500’s ‘Instrument Categories’ menu by typing the company’s name in the search box and clicking on it when it appears in the dropdown menu.
You can open an order form by clicking the ‘Buy/sell’ button on the Capitec Bank shares page. Your order will be complete once you submit the Plus500 order form. To manage risk, you may specify a stop loss or take profit level if desired along with the number of Capitec shares you wish to purchase.
Trading with leverage has a higher risk than without it, so be cautious when you apply it – you end up borrowing money from the broker and charging additional fees. To trade Capitec shares, complete the order form and click ‘Buy/sell.’
As a whole, the following are the seven steps to trade Capitec shares with the highest degree of confidence:
- Open a trading account for FREE here
- Verify the account’s email address or phone number.
- Create two-factor authentication (Two Factor Authentication)
- Get your profile verified by KYC.
- Take a look at the trading dashboard and familiarise yourself with it.
- Fidelity deposits are required for trading.
- Put your money to work by trading in stocks that you want to trade on.
Step 5: Track the position of Capitec over time
The best portfolio tracker apps can help you track your stock and other investments over time once you have bought them.
You can assess the stock’s performance against your investment strategy after you make your initial purchase.
Capitec bank holdings ltd. (JSE: CPI)
Capitec Bank Holdings Ltd. (CPI) financial overview includes share price history, market cap, consensus forecast, news, SENS announcements, contacts, director dealings, and much more. You can find the recent updates here
Current share price of Capitec
|Date of the last dividend:||2021/09/30|
|Return on equity:||24.52%|
|Return on assets:||8.53%|
|Net asset value:||27,637.00|
How EasyEquities makes Capitec investment simpler?
You will save 20% on brokerage fees across all trades if you buy and sell shares directly from the new Capitec Bank app. If you are a newbie to buying or investing in bank shares or expanding your portfolio, it is difficult for people to invest in local or international companies.
You can download a new application and activate the easy equities widget to confirm secure and easy investment from anywhere.
Investing in EasyEquities, an innovative investment platform, is as simple as buying shares within a company for just R5.
By making investments in the local and international stock markets easier and more affordable, they facilitate the purchase of shares. As a result of Capitec’s partnership with EasyEquities, they are providing simpler, easier access to investing so you can improve your financial life.
Investing is not as hard as you may think if you’ve never done it before. Learn the ropes before trading with your own money by using practise money in your demo account.
How does it work?
EasyEquities provides a simplified widget on Capitec’s mobile application for users to use. You can use it to do the following:
- If you already have an EasyEquities profile, link it.
- Set up an EasyEquities profile.
- Try trading with $10 000 (USD) demo money and R100 000 (ZAR). (Note, this is not a real account, and you will not be trading with real money.
- Take a look at your portfolio for an overview of all your ZAR, USD, and tax-free savings accounts.
- Check out your investment type, total account value, and the number of shares.
- Browse shares available locally or internationally on the marketplace.
- Analyse the performance of shares and the costs associated with them.
Advantages with EasyEquities
Among the features you can access via the EasyEquities widget is:
- You can start investing with just R5 – there is no minimum amount
- Get a 20% discount on all trades in these areas:
Your ZAR account holds all shares and ETFs
Your TFSAs contain all ETFs
Your USD account includes all your shares and ETFs
- You can transfer your Capitec account to EasyEquities with a few clicks
- If you are already an EasyEquities user, securely link your account
As of now, when you use the EasyEquities widget on the Capitec app, you will not have to pay brokerage fees on any Satrix ETFs or the top 21 U.S. stocks with the most recent EasyEquities data
EasyEquities accounts can be registered using your Capitec app, which will provide you with a 20% discount on brokerage fees when you invest. If you have a Capitec bank account, you can invest directly through it or fund your account right away via the EasyEquities widget.
What are the types of investments in Capitec?
There are the following investments that you can make in Capitec
- Bank Products
- Investment funds
- Saving for education
How should I invest my money?
Some of the best short-term investments you can make while still earning some returns are listed below.
- Savings accounts
- Corporate bond funds short term accounts
- Money market account
- Management of cash account
- Certificates of deposit
Growth driver for Capitec
Capitec announced the company’s biggest client growth in its financial report before the Covid pandemic. In the 2016 financial year, the bank netted 1.03 million new clients while earning R3.2 billion in revenue, a 26 per cent increase.
In addition to net interest income and net loan fee income, Capitec’s other key performance indicators also showed impressive growth. Shareholders also received a 26% increase in dividends for the year as the company’s share price rose by 16%.
Due to a higher demand for Capitec’s services, Capitec invested R704 million in capital expenditures (and the purchase of property) for the period.
Capitec is particularly well-positioned to attract new customers with its affordable services and simplified operations in the current economic environment. In its long-term and short-term goals, Capitec has outlined several objectives it seems capable of achieving.
Among these are a 50 per cent growth in branches per year, a reduction in service charges for consumer credit, increased internet and mobile banking, and increased bank awareness across all income groups.
What impact has Coronavirus had on Capitec Bank’s stock price?
The stock price of Capitec Bank has trended positively since the stock market crash in March caused by Coronavirus.
On Wednesday, its closing price was R172576, a gain of 19.40% on the R139090. Its stock price was before the March crash, and a rise of 219.67% over the R53986 its stock price reached as a result of that crash.
At the bottom of the March crash, Capitec Bank stocks were worth R924.00 if you had bought R1,000 worth of stocks at the beginning of February 2020. However, as of the last market close, they are worth R1,725.76.
Capitec Bank stock: is it a good time to buy?
You can view real-time technical analysis ratings based on the timeframes you select below. However, this does not imply an endorsement. Based on Moving Averages, Oscillators, and Pivots, it represents a technical analysis of the market. The Finder assumes no responsibility for the results.
Is Capitec Bank undervalued or overvalued?
Several factors go into determining Capitec Bank stock’s value, and each factor must be considered as part of a bigger picture of Capitec Bank’s performance. However, analysts often weigh certain metrics to determine whether a stock is valuable.
P/E ratio of Capitec Bank
The current share price of Capitec Bank divided by the company’s annual earnings per share (EPS) gives it a trailing price-to-earnings ratio of roughly 25.04x. This means Capitec Bank shares are currently trading at around 25.04 times recent earnings.
Environment, social, and governance at Capitec Bank
Capitec Bank measures sustainability and social impact based on three factors called ESG criteria (environment, social, and governance).
Lower ESG scores are generally associated with lower investor risks, as they are associated with lower ESG scores.
ESG score for Capitec Bank
ESG risk as a whole is 34.61
The ESG scores of Capitec Bank demonstrate how well it aligns with socially responsible investments, and its overall score of 34.61 puts it in the 62nd percentile of sectors in the same sector.
Companies like Capitec Bank are increasingly using ESG scores to estimate their exposure to risk in certain areas like
- The “environmental” aspect (carbon footprint, resource usage, etc.).
- As for “social” issues (health and safety, human rights, etc.),
- Governance (anti-corruption, tax transparency).
Future growth expectations
Capitec said its headline earnings per share for six months to the end of 2021 would exceed 3372 cents, representing an increase of at least 500% compared to the same period in the previous year.
The COVID-19 pandemic and tight lockdown restrictions severely affected the comparable six-month period ended 31 August 2020.
As this trading update is based on results for the first quarter of this fiscal year, investors are cautioned regarding the period until 31 August 2021.
Currently, the country is undergoing a third wave of the Covid-19 pandemic. Additionally, the rollout of vaccinations has been delayed, and there have been other issues. Furthermore, the economic environment is challenging.”
Detailed guidance can be provided once the range of the increase in earnings is known. The future forecast of earnings and revenue growth is as follows:
- Regarding earnings growth versus savings rate, CPI forecasts earnings growth of 15% per year versus savings growth of 8.8%.
- Market vs earnings: CPI will have a higher earnings growth rate (15%) than the Z.A. market (12.7%).
- Profit growth will be slow for CPI in comparison to other companies.
- CPI is forecasted to grow faster (17.5% annually) than its revenue (6.6% annually).
- The company’s revenue (17.5% per year) is forecast to grow slower than its 20% yearly revenues.
You should feel clearer about how to buy stocks online after reading this summary. Follow these five steps to buying stock:
- Choosing a good broker
- Research about the Capitec shares
- Opening an account
- Funding the account
- Buying the shares
- Reviewing your portfolio regularly
Investing in stock online is easy to understand. We have outlined this comprehensive guide with step by step instructions to help you buy stock from home using a trusted broker. The Capitec has faced huge drawbacks in the pandemic, but it is getting its value back again.
So, investing in Capitec bank is profitable, and now it is much easier as they have introduced the EasyEquities application as a widget to facilitate investors. All you need is to keep track of the trends and market movements to get profits with your shares in Capitec.
Jason Morgan is an experienced forex analyst and writer with a deep understanding of the financial markets. With over 13+ years of industry experience, he has honed his skills in analyzing and forecasting currency movements, providing valuable insights to traders and investors.
Forex Content Writer | Market Analyst