VFEX to introduce retail oriented products
THE Securities and Exchange Commission of Zimbabwe (SecZim) has said the Victoria Falls Stock Exchange (VFEX) will in the short term introduce new products which are more retail oriented in order to attract more local investors.
The VFEX is a subsidiary of the Zimbabwe Stock Exchange (ZSE), launched late last year as part of efforts to attract global capital, while also helping restore foreign investor confidence in Zimbabwe’s capital markets and help companies raise capital in foreign currency.
Tafadzwa Chinamo, who retires from his post as SecZim chief executive in 2022, said the US$ denominated exchange should attract any ordinary person in Zimbabwe with free funds.
“Not in the distant future, we are going to see more products being offered on the VFEX and these are more retail oriented products which should attract interest or attention of the ordinary person in Zimbabwe with free funds,” he said while presenting on a webinar on Zimbabwe’s economic recovery path.
The ZSE has since 2020 introduced a number of new products aimed at improving retail participation on the local capital markets.
In September 2020, the bourse introduced online trading platform ZSE Direct, which was aimed to make investments easier for the retail market.
The Old Mutual ZSE Top Ten Exchange Traded Fund (ETF) was also launched in January this year to diversify product offerings on the exchange.
Over theyears, retail participation on the bourse has been limited towards institutional investors.
Chinamo said the VFEX was carved out of the need by local companies to raise foreign currency for retooling as well as for working capital.
He said on the ZSE, private players had struggled to raise capital hence there was a need to develop an exchange that would address that aspect.
“The problem we have had over a decade is that our business or private sector has not been able to raise capital. They found it futile to raise money in local currency, so would rather raise it in foreign currency, on the VFEX,” he said.
Chinamo said the market wanted a platform where private players can raise hard currency through issuance of securities, and this is what the VFEX will do in the coming years.
“It also goes beyond raising capital through issuance of shares, but we are also looking at bonds, which are a viable option,” he said.
This comes as the Government has indicated its intention to launch a US$ bond and list it on VFEX in order to build a yield curve not just for domestic debt, but also foreign debt.
Chinamo also indicated that the Commission expects to license a third Real Estate Investment Trusts (REITs).
He said institutions such as pension funds and insurance companies, the majority of them, alone, are not able to fund huge projects, hence investments through REITS will be ideal.
REITs are vehicles that own, operate, or finance income-generating real estate, modelled after mutual funds.
In 2019, the government gazetted a statute paving way for the registration of various investment schemes with the Securities and Exchange Commission of Zimbabwe, such as Exchange Traded Funds as well as REITs – Statutory Instrument 240 of 2019.
Regulations for such instruments were subsequently published in the Finance Act No.2 of 2020.
REITs also make it possible for individual investors to earn dividends from real estate investments without having to buy, manage, or finance any properties themselves.
It comes as the pensions and insurance industry has had to invest most of its assets in property and stocks, which are relatively illiquid, to hedge against high inflation.-ebusinessweekly.cl.zw
