ZSE aims to grow both exchanges
The Zimbabwe Stock Exchange chief executive Mr Justin Bgoni has said his company is not looking to concentrate on one bourse but to give investors value for money at both exchanges.
Through his Twitter account, Mr Bgoni said, “We have worked hard to give our investors quality counters in both USD and ZWL. We believe the capital markets should reflect the Zimbabwean economy. Our aim is now to grow both Exchanges and we are comfortable with our pipeline on both.”
It comes as the chief executive is increasingly under pressure to save the ZSE from the migration of counters to the USD denominated Victoria Falls Exchange (VFEX).
The past few years have seen the local bourse receive brickbats from some stakeholders for alleged role in hurting the local currency.
Allegations, in particular those levelled against the ZSE last year, are that the local bourse was being used for speculative purposes.
With currency depreciation and inflation wreaking havoc, company valuations tanked making the ZSE unattractive to listed entities.
Mr Farai Gwaka the general manager investments at Zimnat Asset Management Company said if one compares the policy thrust and incentives between the ZSE and VFEX, it is clear, in our view, that the ZSE is likely to be cannibalised by the VFEX in the near future.
“Most companies that list on a stock market are looking to either raise capital or provide liquidity in real terms to existing shareholders, none of which is being achieved on the ZSE at this juncture.
“Therefore, the VFEX’s currency of trade (USD), combined with other policy incentives, make it a logical destination for any local and possibly some international companies, to raise capital or to list by introduction,” said Gwaka.
The VFEX is also exempt from CGWT and its cost of trading is much lower than the ZSE, making it more attractive to all investors, once the universe of listed companies increases, a development that is likely to happen sooner, looking at the current trend.
Therefore, according to Gwaka, the VFEX is likely to be the dominant stock market in the country, in the next few years, whilst the ZSE will have to reinvent itself to remain relevant to companies listed there as well as to investors.
A total five firms have since migrated to the VFEX while three more plan to.
Migrating companies have been motivated by the potential of the US dollar-denominated bourse to unlock value for both local and foreign shareholders.
Experts say since the VFEX trades in a stable US dollar, some of the valuation challenges faced by listed entities will be a thing of the past.
For Bgoni the migration is a better option than seeing firms delist as Getbucks has decided to.-ebusinessweekly
