VFEX aims to grow listings to 20 by year end

HARARE – The Victoria Falls Stock Exchange (VFEX) is aiming to secure four additional listings by the end of the year, which would increase the total number of listed equities to 20. Additionally, the exchange is planning to launch the Commodities Exchange in the fourth quarter of the year.

According to CEO Justin Bgoni, VFEX currently has a strong pipeline with a target of four more listings before the end of the year. This follows the listing of Invictus Energy ZDRs and the announcement that gold exploration company Kavango Resources will soon list on the hard currency exchange which was established in 2020. Other expected listings are Diaspora Kapita, Pfuma REIT, Eagle REIT and two ETFs, though some may list in Q1 next year.

On the commodities exchange, Bgoni said the exchange was now awaiting the gazetting of the commodities rules. “We have assembled all the key personnel for the commodities exchange and are currently finalising all the necessary process flows and procedures. The target launch is Q4 2024.”

The expected benefits of the commodities exchange once it launches include, increased market liquidity, diversification of investment options, price discovery, risk management or hedging against price volatility in commodity markets, and a regulatory framework that enhances transparency and trust in the trading of commodities. These benefits collectively aim to strengthen the overall financial ecosystem in Zimbabwe and promote economic growth

The ZSE has experienced a significant drop in investor interest in recent years, raising concerns about its competitive standing in the region. This decline is largely due to economic instability, regulatory hurdles, and insufficient liquidity, which have rendered the ZSE less appealing to both potential and existing investors. As a result, there has been a marked shift in investment activity away from the ZSE, with investors seeking more stable and lucrative opportunities elsewhere.

To enhance the exchange’s attractiveness for both local and foreign investors, plans are underway to introduce intraday trading and reduce the settlement period. “Before we can launch these initiatives, we have been conducting tests with various market participants. We have completed the tests and are currently addressing feedback from our stakeholders. Our target launch is Q3 2024,” Bgoni explained. He noted that the introduction of day trading and a faster settlement cycle would improve market efficiency and appeal to foreign investors.

“As global markets evolve and reduce the time required to access proceeds and holdings, these initiatives will make us more competitive and attract foreign investors. We are also participating in international investor conferences in collaboration with the Ministry of Finance, Economic Development, and Investor Promotion to promote both ZSE and VFEX,” he added.

For the ZSE to remain a viable investment platform, a stable currency is crucial. Currently, the ZiG is stable, and the government’s commitment to de-dollarization further supports the ZSE’s role as a reliable investment venue for companies. This commitment ensures a secure environment for investors.

However, a diverse range of securities is essential for an exchange’s strength and appeal. At present, the ZSE’s offerings are heavily weighted towards equities, with fewer options available in categories such as Real Estate Investment Trusts (REITs), Exchange-Traded Funds (ETFs), and Bonds. To enhance its attractiveness and functionality, the ZSE is focusing on expanding its portfolio to include a wider array of financial instruments. By incorporating more REITs, ETFs, and debt instruments, the ZSE aims to provide a more comprehensive selection of investment options.

This diversification will cater to various investor needs and strengthen the exchange’s overall market appeal and stability. As the ZSE evolves and adapts its offerings, it remains dedicated to providing a dynamic and varied investment platform that accommodates a wide range of investor preferences and contributes to a more robust financial market.

The VFEX has emerged as a promising alternative, attracting interest from both companies and investors. VFEX offers a more favorable environment with improved regulatory frameworks and streamlined processes, appealing to businesses looking to transition from the ZSE.

Since the implementation of SI 110 of 2024 on June 28, 2024, the market has seen a significant increase in liquidity. According to ZSE data, July 2024 recorded an impressive 206% rise, reaching ZWG 314 million. “There was a notable enhancement in trading activity, with average monthly trades increasing from 2,168 between April and June 2024 to 4,120 in July 2024,” Bgoni noted.-finx