Mixed year for equities markets
Equities on both the Zimbabwe Stock Exchange (ZSE) and Victoria Falls Stock Exchange
(VFEX) have traded mixed since January with markets experiencing a hive of activity that
saw them climb to record highs seen in April before plunging.
After sustained gains since the beginning of the year, the equities saw a spectacular
collapse after the first quarter following policy measures introduced to curtail arbitrage
and speculative tendencies that hurt the local currency.
From listings to delistings and migrations, the main bourse-ZSE- and the VFEX have had
a roller-coaster of a year, although the VFEX maintained positive gains.
Among the major highlights of the year have been listings on both the exchanges with
ZSE welcoming its first Real Estate Investment Trust (REIT) listing – Tigere REIT, which
ldebuted on November 30, 2022.
The exchange also witnessed the listing of four Exchange Traded Funds (ETFs) namely
Morgan & Co Made in Zim, Morgan & Co Multisector, Datvest and Cass Saddle ETFs.
The ZSE has also seen counters delist for relisting on the VFEX, which allows businesses
to trade and raise capital in foreign currency; offshore settlement allowances that lower
exchange control risks and has reduced trading costs of 2,12 percent compared to 4,63
percent on the ZSE.
There are also more tax incentives for shareholders on VFEX, including 5 percent
withholding tax on dividends and no capital gains tax on share disposal, which has seen a
huge number of companies seeking to relist their stock on the bourse.
This year alone, the VFEX took listings of the Nedbank Zimbabwe Depository Receipts,
Simbisa Brands Limited shares (December 02, 2022), while Karo Mining Holdings listed
its bond to raise US$50 million on December 14, 2022.
Proceeds of the KMH bond will partly fund its open pit asset located on the Great Dyke.
National Foods is scheduled to list on December 23, 2022 while GetBucks and Axia have
also expressed interest to migrate to the US dollar-denominated exchange. Trading in
Natfoods shares on the ZSE has already stopped as the group makes way for its delisting
and relisting on the VFEX.
Diversified industrial giant – Innscor has also announced its intentions to migrate to the
VFEX.
More listings are expected as businesses seek to unlock value and raise capital for their
projects while ZSE has largely remained undervalued.
“There is a marked trend in ZSE listed companies migrating to the VFEX, which is to be
expected albeit liquidity will take some time to build,” said stockbrokers IH Securities in
a macro-economic update.
According to the brokerage firm, the year-to-date daily average value traded on the ZSE
as of November was at US$986,708 compared to US$1,35mn for the same period last
year.
“However, the market is currently trading at circa 52 percent discount to its historical
average market cap of US$4 billion despite fundamental growth in businesses over the
past three years.
“This presents buying opportunities in most of the counters,” said IH Securities.
Total market value has dropped 79 percent to US$2,5 billion from a high of US$10 billion
in April 2022.
In US dollar terms, Delta, Econet and TSL have dropped 75 percent, 85 percent and 90
percent on a year-to-date basis while Innscor and BAT have dropped 64 percent and 84
percentrespectively.
But the Cass Saddle and Morgan & Co Made in Zimbabwe ETFs have jumped 9 percent and
38 percent in US dollar terms.
However, in line with economic growth projections for 2023 of 3,8 percent, driven by
primary sectors of the economy, experts believe there will be improved liquidity which
will drive demand by retail investors.-The Herald
