VFEX continues to attract more firms
The month of October has seen the Victoria Falls Stock Exchange (VFEX), attract attention as more big companies have announced intentions to migrate from the main bourse to the US dollar denominated exchange.
This comes as companies are looking for a stable and reliable platform for raising working capital in foreign currency, currency stability in addition to tax incentives for shareholders offered by the exchange.
Currently, with four counters – Bindura, Caledonia, Padenga and Seed Co International – the VFEX is set to add Simbisa Brands on board on December 02, 2022 after delisting from the Zimbabwe Stock Exchange (ZSE) this month.
Simbisa said the migration to VFEX is expected to help the group raise working capital for the fast food chain, which has a line-up of expansion projects for the next two financial years.
The group has highlighted that the Zimbabwe operation continues to generate all its foreign currency from the sale of its products in the local market in line with the multi-currency framework prevailing and therefore does not have access to the Reserve Bank of Zimbabwe (RBZ) foreign currency auction system.
Simbisa said; “The benefits of the proposed transaction include, but are not limited to, the following: capital markets deepening through a broader shareholder base and ability to raise capital in foreign currency; offshore settlement allowances lowering exchange control risks; lower trading costs of 2,12 percent compared to 4,63 percent on the ZSE may improve the shares’ liquidity; tax incentives for shareholders including a 5 percent withholding tax on dividends and no capital gains tax on share disposal.”
Apart from Simbisa, food processing giant – National Foods Limited has also announced its intention to migrate to VFEX while micro-finance services provider – GetBucks is also trading under a cautionary as it also announced its board approved plans to delist from the ZSE and list on the VFEX.
Experts in the capital markets forecast more companies will leave the primary bourse – ZSE where they are undervalued. Listing on the VFEX will allow them to have forex valuations and more attract to investors.
Meanwhile, monthly turnover for October jumped 74 percent to $8,64 billion compared to $4,94 billion in the previous month on the ZSE driven by gains in some heavy weight counters.
This was after 201 million shares exchanged, which was 47 percent above those traded in September.
The primary indicator, the ZSE All Share Index rose by 2 percent to 15 072 points from 14 771 points on the back of gains recorded across the board.
At 8 878 points, the market’s big cap counters, the ZSE Top 10 Index was, however slow, falling by 2 percent to 8 878 points from 9 140 points recorded in the comparable month.
The Mining Index of one counter – RioZim ticked 24 percent to 23 659 points.
Foreign participation remained skewed towards sellers as 29,9 million shares were sold worth $2,2 billion against 1 million shares bought worth $150 million.-ebusinessweekl
