THE Zimbabwe Stock Exchange (ZSE) plans to list on its own bourse in the coming year, a strategic move it says is aimed at securing better access to risk-adjusted capital and boosting its brand visibility, businessdigest can report.
This development, according to ZSE board chairperson Caroline Sandura, marks a significant milestone in the exchange's history and is expected to have far-reaching implications for the market.
Formed in 1896, ZSE is the backbone of Zimbabwe's capital markets, with over 40 listed equities. It also owns the Victoria Falls Stock Exchange (VFEX), which exclusively trades in United States dollars.
“As part of our strategy, the board has decided to self-list the business in the coming year for the following reasons: to access more appropriate risk-adjusted capital (debt and equity); to unlock shareholder value,” Sandura said in the bourse’s 2023 annual report.
“…to strengthen and enhance the visibility of the ZSE brand to both the public and private sectors, leading to new business opportunities; and to further strengthen the corporate governance and reporting structures of the company by adhering to the rigors of a listing.
“The self-listing process is currently underway and is subject to approval by shareholders at an EGM (extra-ordinary general meeting), which we anticipate to hold later in 2024.”
The Securities and Exchange Commission of Zimbabwe last year revealed that it had developed draft self-listing rules for exchanges.
The government has since approved the self-listing rules.
Currently, there are three exchanges in Zimbabwe namely ZSE, VFEX and the Financial Securities Exchange.
Sandura indicated that 2024 may be difficult for the economy because of the macroeconomic challenges. However, she noted that these conditions may increase the appetite for inflation-hedging assets and promote investor participation on the exchange.
“High inflation, depreciating local currency, and decreasing consumer disposable incomes may make capital raising on the ZSE difficult. On the contrary, we anticipate the Victoria Falls Stock Exchange to prime itself as a viable capital-raising option.”
Justin Bgoni, chief executive officer at ZSE, however remained optimistic about the prospects of the business environment ahead.
He said the changes to the Zimbabwean currency were likely to have a positive impact on the ZSE’s trading activities in the long run.
“This, in turn, is expected to drive growth and increase investor confidence in the market. The diversification of products on VFEX is also expected to play a significant role in the exchange’s growth prospects,” he said.
“This increased product diversity will not only attract new investors but also provide existing ones with more opportunities to diversify their portfolios.”
Bgoni said the year 2023 was a difficult period given the increased global conflicts and El Nino induced drought in the southern region and the currency volatility, which led to significant government interventions to try to address the challenges in the market.
“The ZSE experienced a period of general depression, evidenced by the significantly low number of trades and two de-listings on the bourse,” he said.
“This is mostly attributable to the restrictions placed on the market through SI 103A of 2022 which effectively increased overall trading costs on the market. However, amidst this downturn, a positive development emerged with the listing of a new Real Estate Investment Trust named Revitus Property Opportunities REIT.
“This listing is indicative of the potential for growth within the REITs space, offering a glimmer of hope for future prospects.”
The ZSE chief noted that VFEX, on the other hand, experienced notable progress, with the addition of six new counters to its listings and improved trading levels. This uptick in activity on the VFEX reflects growing confidence and interest from the market participants in this platform, underscoring the increasing momentum and viability of the waterfall bourse as a key player in the financial market.
“As we navigate through challenging times, these developments serve as promising indicators of resilience and growth within our market,” he said.
In the trading year of 2023, the ZSE Allshare Index, serving as the comprehensive gauge of the exchange’s performance, saw a remarkable 981,54% increase to conclude the year at 210 833,92 points.
This substantial surge was primarily driven by the overall uptrend in local prices, considering that the ZSE predominantly operates in local currency.
In real terms, the returns on the ZSE were positive when compared to the official exchange rate which depreciated by 792%. Conversely, the VFEX Allshare Index experienced a decline of 28,86% throughout 2023, ultimately closing at 70,48%.