THE Zimbabwe Stock Exchange (ZSE) has become the favourite destination for investors focused on wealth creation ahead of the foreign currency denominated Victoria Falls Stock Exchange (VFEX) because of its stability, a trading expert has said.
VFEX was officially launched in 2020 with the commencement of trading, depository services, clearing and settlement on the secondary bourse.
A number of top companies delisted on the ZSE to list on the VFEX as they sought to raise foreign currency to oil their operations in a hyperinflationary environment. The ZSE continued to trade solely in local currency.
Michael Mautsahuku, the Smartvest Wealth Managers company secretary and portfolio manager told the just-ended Chartered Governance and Accountancy Institute in Zimbabwe (CGI) annual conference in Victoria Falls, that the ZSE remained the best avenue for wealth creation.
“As of ( last Thursday) on the ZSE, the year-to-date performance, all share index was 160%,” Mautsahuku said.
“The VFEX was over 3.15%. The top-five performance on the basis of this on ZSE were Unifreight, 977.8% return, Art, 442% return, FBC, 414% return, Marsh, 367.7% return and Proplastics, 342.89%.
“So, these are real returns even if you compare the inflation and depreciation exchange rate.
“After all those computations, these are real returns. So, people are creating wealth. We are building wealth on the ZSE which is designated in the local currency.”
- Inaugural Zim investor indaba highlights
- Stop clinging to decaying state firms
- ZB explores options to tackle inflation
- Zim operations drive FMB Capital
Keep Reading
He said the best-performing counter at the VFEX on the year-to-date basis was FCB Bank at 115.3% while National Foods stood at 31,3%, Bindura (10.6% )and Axia Corporation (8.7%).
Mautsahuku said the ZSE was performing better than the VFEX when comparisons were made on the top five performers on both bourses.
“Then, the worst performing VFEX are Zimplow, on a year-to-date basis, which has lost 55.6%, African Sun (30.3%), Seedco International (29.6%), Padenga (14.4%) and Nedbank (7.9%),” he said.
“On the ZSE, the only counter on the negative performance on a year-to-date basis is at 0.49%. All other counters are in blue.
“So, the long and short of it is, if you want to create money-based on the state of affairs as of yesterday, money is being created on the ZSE, which is based on local currency.”
Mautsahuku said traders were losing money on the VFEX despite getting remittances in hard currency. He said there was need for traders to choose counters based on measurable fundamentals.
“Some people are making money like those who invested on the Victoria Falls Exchange, but my personal opinion going forward is that more money and more wealth will be created on the Zimbabwe Stock Exchange,” he added.
He said traders that had lost values on the VFEX must decide on where to put their money depending on their investment objectives.
“If you are a pension fund you can either hold on to stock in anticipation of an increase in future or alternatively you can cut your losses and look for alternative options,” Mautsahuku said.
“So it all depends on your investment objectives. Then in terms of the actual underlying value of the company, it also depends on your investment objectives.
“If you are investing on the stock market the normality then is to make a very quick return.
“If it’s overnight and if you don’t have a short-term hold, it means it’s over the long term.”
Zimbabwe’s stock market has suffered from currency volatility and policy inconsistencies for a long time.
