‘Stock market must diversify’
FINANCE and Economic Development Minister Professor Mthuli Ncube has said there is a need for the country’s stock market to diversify into bonds and commodity trading for it to make an impact in the global financial market.
In a virtual address on the first day of the commodities exchange workshop organised by the Victoria Falls Stock Exchange (VFEX) in partnership with the Dubai Gold and Commodities Exchange (DGCX) which opened in Victoria Falls yesterday, Prof Ncube said the Government is exploring the setting up of an offshore financial services centre in
Victoria Falls.
He said the envisaged commodities exchange will be a key component.
“My Ministry has supported the VFEX since it was mooted as an idea and we are encouraged to see that such a young exchange is quickly looking to broaden its products and services.
“In global markets, commodities trading ranks as number three in terms of value traded daily, below foreign exchange which is ranked number one and bonds on second.
“This implies that if we are to make an impact in the global financial markets, we have to diversify from share trading into bonds and commodity trading,” he said.
Added Prof Ncube: “The growth in our financial markets will no doubt lead to creation of employment, increase export earnings in the formal channels and strengthen capital raising opportunities for our extractive sectors.”
He said this would ultimately help in transforming Zimbabwe to an upper middleincome economy in line with Vision 2030.
The offshore financial services centre, Prof Ncube said will help develop and deepen the financial service sector through provision of opportunities for global investment. He said the offshore financial services centre is in reality an attempt to create an investment environment in which international capital can flow freely.
Prof Ncube said free flow of capital requires both the supporting legislation and the underlying products – of which the commodities exchange is part of the infrastructure that provides the investment products.
“We can all agree that investment is essential in driving economic growth and creating an attractive investment climate is one step towards achieving that.
“The onus is therefore on every stakeholder here present to take advantage of this workshop to learn how we can utilise the commodities exchange to our benefit.”
“With a well-established player in commodities trading like DGCX, we look forward to a fruitful exchange of ideas and technical know-how that should culminate in us being able to replicate the success of commodities exchange in our own beautiful country under the vibrant VFEX.”
He said the Government is committed to building a robust, resilient and growing economy and promulgating investor friendly policies.
The Second Republic, he said will continue to be supportive of such strategic partnerships and was open to proposals that can attract global investment and grow the economy.
Prof Ncube said Zimbabwe is endowed with various minerals, adding that one of the National Development Strategy 1 (NDS1) objectives is to accelerate value addition and beneficiation of agriculture and mining production.
Enhancing investment in mining towards exploration, beneficiation and value addition of minerals including levelling the field to accommodate small-scale miners will create more jobs and increase foreign currency earnings for the country.
Establishment of a local commodity exchange can aid in achieving the vision through provision of a transparent market where price discovery and hedging instruments can be established, explained Prof Ncube.
A Government delegation visited Dubai a month ago where VFEX signed a strategic Memorandum of Understanding (MoU) with DGCX.
Prof Ncube said he was elated that the MoU was being operationalised within a month of signing as evidence by the workshop which ends on Friday.
DGCX is a leading derivatives exchange in the Middle East and has played a pioneering role in developing the regional market for derivatives trading, clearing and settlement. He said it was opportune for VFEX to tap into DGCX expertise in setting up a commodities exchange.
DGCX will extend technical support, knowledge and skills to VFEX, with the ultimate aim of establishing an international commodities exchange in Zimbabwe.
The successful establishment of the commodities exchange will also enhance direct
investment in the country.
Foreign investment is required to close funding gaps required to grow the productive
sectors. – The Chronicle
