The Sunday Mail
PROFITS for local stockbroking firms have taken a plunge as bears continue to hold sway on the Zimbabwe Stock Exchange.
Brokers mainly rely on fees charged on the sale of securities.
The sluggish ZSE performance has lasted since January 2015, with total turnover tumbling 40 percent to US$122 million in the five months to May compared to the same period a year earlier.
Investors have lost more than US$400 million of value during the first six months of the year, as the mainstream industrial index dropped 10 percent to 146,90 points on a year-to-date basis.
Minings have tanked by more than 40 percent to 42,34 points since January 3.
Foreign trades, the lifeblood of most brokers, have halved to US$63 million during the same period from US$133 million last year.
Earnings reports of brokerages have not been satisfactory as a result.
In its financials for the year ended December 2014, FBC Holdings acknowledged the strain on FBC Securities Private Limited, its stockbroking unit.
Other units operated relatively well.
“The unit was able to reduce the effects of a declining brokerage income and recorded a marginally above break-even comprehensive income level for the year 2014,” said FBC Holdings group chief executive Mr John Mushayavanhu in a statement accompanying financials.
ZB Financial Holdings recently chose to shed its stockbroking firm after it continued to haemorrhage.
The group’s financial results for the year ended December 2014 said: “ZB Asset Management Company and ZB Securities were not significant players in their sectors and were identified for disposal in an effort to ensure that the scarce resources of the group were directed to areas where the Group has critical mass.”
It is understood that only two stockbroking firms are keeping their heads above water.
Market regulator the Securities and Exchange Commission of Zimbabwe (SECZIM) believes challenges affecting stockbrokers are not peculiar to the sector, but are economy-wide.
And there is growing optimism that automation of the exchange will reverse the tide.
“The majority of (stockbrokers) cannot be doing well. They are not doing well because they get commission from the shares that trade on the market,” said SECZIM chief executive Mr Tafadzwa Chinamo, adding: “This (automation) should improve the liquidity situation at the stock market.”
Investor protection levy re-introduced
Meanwhile, SECZIM, which suspended the investor protection levy in June last year for smooth transition from a manual to electronic trading, has reintroduced the fee effective July 1.
Regulators levy a 0,025 percent fee on the buying or selling of shares to cushion investors against future failure of listed companies.
In June, the stock market retreated by 3,2 percent while total market capitalisation declined to US$4,15 billion.
Month-on-month turnover at US$11,9 million was 69 percent weaker while daily average turnover was US$500 000.
Weak trading in heavyweights Delta, Econet and Innscor dragged the industrial index 2,98 percent to 148 points.
Delta, the largest stock by market capitalisation, lost 3,9 percent; while Econet and Innscor fell 11 percent and 1,6 percent, respectively.
The mining index lost 0,34 percent dragged by losses in Bindura, which shed off 7,5 percent, offsetting gains by Hwange and RioZim, which gained four percent and 55 percent correspondingly.
Other gains in June were in Willdale (66 percent), Powerspeed (60 percent), ZB Financial Holdings (40 percent) and Turnall (40 percent).
