Investor Protection Fund surges 240pc to US$3,7m

The Securities and Exchange Commission of Zimbabwe (SecZim’s) Investor Protection Fund (IPF) surged by 240 percent to $82,34 billion (US$3,733 million) in the quarter to March 31, 2024 from $24,24 billion as of December 31, 2023, with the growth driven by listed equities’ market value.

Zimbabwe changed its currency from the Zimbabwe dollar to Zimbabwe Gold (ZiG) on April 5, 2024, to address volatility and inflation challenges.

The purpose of the fund is to provide compensation to protected investors for losses suffered as a direct result of a licensed contributor to the fund being unable to meet their liabilities through insolvency, malpractice, or other causes.

According to the Securities and Exchange Commission of Zimbabwe’s (SecZim) financial sector report for the first quarter to March 31, 2024, listed equities’ market value increased by 266 percent to $53,16 billion from $14,52 billion recorded in the prior quarter.

During the quarter under review, the IPF exposure was 65 percent to listed equities, 19 percent to direct property, and 13 percent to indirect property. 2 percent is in the money market, while 1 percent is cash and other accounts.

SecZim, in its report, said the unclaimed share portfolio valuation as of March 31, 2024 stood at $80,69 billion and US$593 059,11.

The SecZim last year drafted a Statutory Instrument to encourage investors to claim their shares from the Investor Protection Fund.

The commission said the project included the removal of statutory fees upon an investor coming forward to claim their shares and trade them through the market.

Meanwhile, total funds under management (FUM) by investment managers during the first quarter of 2024 increased 242,17 percent to $57,77 trillion from $16,88 trillion in the period to December 31, 2023, largely driven by increased exposure to the stock market.

The total FUM includes a US dollar-denominated FUM of US$830,28 million, which was translated to Zimbabwe dollars at the interbank rate as of March 31, 2024.

“The industry average FUM for the period ended March 31, 2024, stood at $2,51 trillion,” reads the report.

The report noted that the sector’s exposure to the stock market increased to 51,83 percent from 42,58 percent recorded in December 2023.

“However, the increase in exposure to the stock market was largely constituted by upward revaluations on equities due to inflationary pressures,” SecZim said.

It was noted that during the quarter under review, there was a significant decrease in the sector’s property investment exposures from 45,81 percent recorded in December 2023 to 36,58 percent reported as of March 31, 2024.

Money market investments increased from 3,27 percent recorded in December 2023 to 4,81 percent reported on March 31, 2024.

In the quarter under review, investment in unquoted equities declined from 4,15 percent recorded as of December 31, 2023, to 3,36 percent recorded as of March 31, 2024.

The report shows that cash/call deposits, bonds, and other investments all account for the remaining 4,49 percent of investment exposures for the asset management industry.

In terms of the securities exchange performances during the quarter under review, the total turnover for equities, ETFs, and REITs markets on the Zimbabwe Stock Exchange (ZSE) was $339,15 billion, $2,17 billion, and $23,97 billion, respectively.

SecZim said the Financial Securities Exchange (FINSEC) recorded trades worth $1,90 million during the quarter under review.

On the foreign currency-denominated Victoria Falls Stock Exchange (VFEX), there were 2 846 trades amounting to US$12,11 million for the quarter ended March 31, 2024.

During the quarter under review, SecZim said it revised the capital adequacy framework for securities market intermediaries in response to the current operating environment.

For the quarter under review, six securities investment advisory firms had their licenses cancelled, while one firm was granted a license in the same category.

As a result, the total number of licensed securities investment advisory firms decreased from sixty-five to sixty as compared to the previous quarter.

“Additionally, there were new additions in other licensing categories, including one Securities Trustee and one Collective Investment Scheme,” SecZim said.

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