VFEX remains steady, new listings drive activity: experts

Activity on the Victoria Falls Stock Exchange (VFEX) has remained steady, with a slew of new listings in the year expected to drive trading activity and liquidity, experts have said.

VFEX, a US dollar-denominated stock exchange, since its inception in October 2020, has seen listings from various sectors such as mining, financial services, tourism, hospitality, and clothing, with a number of counters having migrated from the Zimbabwe Stock Exchange (ZSE), which trades in local currency.

While the USD-denominated exchange has been characterised by low trading activity, experts believe the continued onboarding of new counters and investment products by the bourse will improve the exchange.

Gift Chawasarira, finance director at Diaspora Kapita (DK), said in an interview that liquidity is a function of the products that you are offering, and VFEX has been developing investment platforms such as commodities and the bond market.

“If you put exciting products, the market will accept them, and people have the money to invest. As DK, we are bringing innovative products that will attract people to come together to invest, and I believe there is quite a lot of money based there in the pension funds,” he said.

Diaspora Kapita is the latest company to have shown interest in listing on VFEX once the acquisition transaction by Bridgefort Capital concludes.

Diaspora Kapita, established in 2014 in South Africa, is a collaborative venture between Zimbabweans living in the diaspora and their counterparts in Zimbabwe, and the group provides a range of services and investment opportunities tailored to the diaspora community.

These include comprehensive funeral services, which cover funeral arrangements, burials in South Africa and repatriations to Zimbabwe, diaspora-targeted investments, and alternative investment solutions.

Chawasarisa said the transaction, which has since received shareholder approval, is now awaiting exchange control approvals from both the Reserve Bank of Zimbabwe (RBZ) and the South African Reserve Bank and hopes to have listed on the bourse before year-end.

VFEX in its third quarter 2024 newsletter said it onboarded its 16th listing on the bourse, the Invictus Energy Depository Receipts, which listed on 02 August 2024.

Retailer Edgars Stores also migrated its listing from the ZSE in the third quarter of 2024, and additionally, VFEX also launched the contracts for differences.

The exchange is also in the process of launching the commodities exchange after the rules governing its operations were gazetted.

Equities research and stockbroking firm IH Securities said the pipeline of counters migrating to the VFEX remains steady, with the bourse aiming to secure four additional listings by the end of the year, with the most recent announcement of intent to list coming from mineral exploration company Kavango Resources.

In its growth strategy report year to date, IH said whilst liquidity on the bourse has been an area of concern since inception, year to date average daily value traded to the 28th of October increased 84 percent to US$0.16 million from US$0.09 million in the comparable period.

It said the commodities exchange is expected to boost market liquidity in addition to diversifying investment options.

Justin Bgoni, the VFEX chief executive earlier in the year, said the bourse continues to attract listings from both domestic and foreign companies and is targeting more than six new listings by the end of this year.

Batanai Matsika, an investment analyst, said VFEX could have been better, but because of liquidity issues, there is limited trading, but in terms of capital raising, it has saved the purpose.

“Businesses indexed in USD still have an appetite to go there, and I think they have not moved because they are still assessing the liquidity issues on how they will evolve. It’s about timing, but every business would want to trade in USD,” he said.

Tanganda Tea Company Limited is also aiming to list on VFEX while planning to raise US$7,7 million through a renounceable rights offer.-ebsinessweekl