VFEX activity picks up in Q2, but ZSE slows

The volume and value of trades that were settled on the Victoria Falls Stock Exchange (VFEX) Depository in the second quarter (Q2) of 2023 increased by 78,52 percent to 2,230 from 479 executed during the previous quarter.

The VFEX Depository is the department of the VFEX that is responsible for the operation of the Central Securities Depository (CSD).

According to the depository newsletter, as of June 30, 2023, the VFEX had a total of thirteen issuers, two of which are depository receipts and one bond.

“We anticipate on-boarding additional issuers before the end of the year,” said VFEX.

During the quarter under review, the list of counters on the VFEX Depository included Seedco International.

Padenga Holdings, Caledonia Mining Corporation, Bindura Nickel Corporation Limited, Nedbank Depository Receipt, Simbisa Brands, Karo Mining Limited, and National Foods Holdings Limited

Others are Innscor Africa Limited, Axia Corporation Limited, African Sun Limited, First Capital Bank Limited, and West Properties Holdings Limited.

According to the newsletter, the average dematerialization ratio for the counters on the VFEX depository as of June 30, 2023, was 22.70 percent.

Dematerialization is the process of converting physical shares into electronic formats. An investor who wants to dematerialize his shares needs to open a demat account with a Depository Participant.

A subsidiary of the ZSE, the VFEX was launched in 2020 as an off-shore-biased financial services center as part of the country’s efforts to attract global capital and restore foreign investor confidence in the capital markets while helping companies raise capital in foreign currency.

The exchange has continued to gain momentum as issuers chase broadened capital sources, tax incentives, and brand positioning.

Meanwhile, according to the report, the volume and value of trades that settled on the ZSE Depository in Q2 2023 declined by 29.48 percent to 2,263 from 3,209 in the previous quarter.

The value traded during the quarter also declined 36.89 percent to $7,736 trillion compared to $12,259 trillion in the first quarter.

The ZSE is also upbeat that the exchange will attract more quality counters as well as ETFs and REITs.

Currently, the listed ETFs are the Datvest Modified Consumer Staples ETF, Morgan and Co Multi-Sector ETF Trust, Morgan and Co Made in Zimbabwe ETF, and the Cass Saddle Agric ETF.

The ZSE Depository became the second CSD in Zimbabwe’s equities market, and according to the ZSE, the move to launch the ZSE Depository was driven by the need to improve operational efficiencies in the market.

The needs also included reducing market costs for all participants, making it easier for retail investors to access the market, and facilitating the introduction of new products.-ebusinessweekly