THE capital market sector in Zimbabwe remained resilient in the first quarter of this year, as measured by securities market intermediaries’ (SMIs) ability to maintain adequate capital and fair profitability.
Data gathered from the Securities and Exchange Commission of Zimbabwe (SecZim) showed that funds under management (FUM) stood at ZW$2,4 trillion (about US$2,6 billion as at March 31 2023), a 54% surge from the December 2022 figures.
The industry average for the period under review stood at ZW$115 billion (US$123,8 million). The year-on-year comparison shows a 212% increase.
Total FUM denominated in United States dollars stood at US$17,8 million.
“The industry’s exposure to the stock market rose steadily to 54% from 46,08% recorded in December 2022. This was largely attributable to the rebound of trading activity on the Zimbabwe Stock Exchange (ZSE),” SecZim said in its first quarter report. “Exposure to property investments dropped from 42,84% recorded in December 2022 to 34,27% recorded in March 2023.
“Private equity, money market, cash/call deposits and bonds all account for the remaining 10,96% investment exposures for the asset management industry.”
The custodial services business, which is primarily carried out by registered banks namely, CABS, CBZ, FBC, StanChart, Stanbic, and ZB, held assets on behalf of clients worth ZW$2,33 trillion (US$2,5 billion) in the period under review, up from ZW$1,44 trillion (US$1,6 billion) as at December 31 2022. The report indicated that foreign clients’ owned assets composition increased to 20,1% and the local market’s assets went down to 79,9%.
The ZSE recorded an increase of 14 % in turnover value, while volumes traded decreased during the same period.
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C-Trade, the financial securities (Finsec)’s digital platform for securities trading recorded growth in total buy value and total sell value of 50,98% and 272,02%, respectively.
The CDC settled a total of ZW$42,42 billion (US$45,7 million) worth of trades during the quarter. Corporations reported 78,50% of the total shares bought, followed by government institutions, which reported 11,84%.
Pension funds accounted for 6,79%.
SecZim said collective investment schemes (CIS) funds under management increased by 22,8%.
“The increase was attributable to the increase in prices of underlying investments, particularly equities and the introduction of new CIS funds during the quarter,” it said.
The funds had a total of 81 115 unit-holders, with funds invested in a variety of instruments, such as equities, properties and money market investments.
Earnings for the industry were rated fair for the quarter. Overall profitability fell slightly 6% to ZW$510 million (US$548 977) for the three months.
The industry’s capital adequacy was rated satisfactory.
Earnings in the asset management industry were rated satisfactory for the period under review.
The average operating profit for the industry for the quarter was ZW$251 million (US$270 182), a significant decrease from ZW$373,09 million (US$401 603) recorded in the previous quarter.
As at March 31 2023, the industry’s capital was rated satisfactory.
The investor protection fund grew by 49% to ZW$4,11 billion (US$4,4 million) from ZW$2,76 billion (US$3 million) recorded in the quarter ended December 31 2022. This was largely driven by investment gains from listed equities and property revaluation, it said.
During the first quarter, seven new CIS were licenced, bringing the total number of licenced to 79 inclusive of dormant funds, up from 72 as of December 31, 2022.
