Bright year for Zim capital markets

29 Jan, 2023 - 00:01 0 Views
Bright year for Zim capital markets

The Sunday Mail

Enacy Mapakame 

Prospects are bright for the country’s capital markets in 2023, with new listings expected on both the Zimbabwe Stock Exchange (ZSE) and the Victoria Falls Stock Exchange (VFEX).

With the envisaged growth in key economic sectors, businesses are likely to benefit from improved consumer disposable incomes and better accessibility of foreign currency.

The growth is expected to cascade to the equities market, with businesses also turning to the two trading platforms to raise capital for their expansion projects.

ZSE chief executive officer Mr Justin Bgoni revealed 2023 will be an exciting year for the two markets, with new listings in the pipeline across the various products offered.

While the ZSE has been hit by migrations to the VFEX, Mr Bgoni said it was not all doom and gloom on the primary bourse.

“We are confident that significant counters, as well as numbers, will remain on the ZSE. In addition, we have a pipeline of REITs that want to list on the ZSE, so we believe there will be significant additions, too,” he said in an email.

On the VFEX, the exchanges boss revealed that issuer interest was high on the US-dollar-denominated exchange across its various product offerings.

“On the ZSE we, expect new REIT listings. On the VFEX, we expect all types (of listings), including equity, debt, ETFs and REITs,” he said.

The VFEX currently has eight listings and of these, five were listed on the ZSE before.

Launched in 2020, the VFEX also remains a viable option for investors with US dollar liquidity, offering attractive returns in a more stable currency than the local one.

The exchange offers a 5 percent withholding tax on dividends and no capital gains tax on share disposal, meaning shareholders are able to retain more of their earnings, compared to the situation prevailing on the ZSE.

Overall, market watchers are upbeat over the positive performance on the capital markets.

“We anticipate a general bullish sentiment to prevail on the stock market.

“However, gains may be moderated by inflation-tightening measures that may limit availability of liquidity.

“We believe investors should consider companies with diverse business models, inflation-hedging capabilities and foreign currency generation capacity, in the counter- selection process,” said FBC Securities.

While experts expect an upturn in equities performance on both exchanges, the VFEX is expected to maintain its attractiveness this year and excite more businesses ahead of the ZSE.

The VFEX was launched as part of efforts to attract global capital, restore foreign investor confidence in Zimbabwe’s capital markets and assist companies raise foreign currency capital.

The bourse experienced rapid growth in the last quarter of 2022, apart from attendant value opportunities. Arbitrage has also been pivotal in attracting migrations.

“As more companies’ foreign currency generation improves, especially those involved in consumer staples, tourism and hospitality, agricultural exporting and mining companies, we anticipate more listings on the VFEX in the current year (2023),” said FBC Securities.

Innscor, Axia Corporation and Seed Co Limited are among the companies that have expressed interest in migrating to the VFEX early this year.

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