ZSE raises alarm as daily trades dip 92%

DAILY trades at the Zimbabwe Stock Exchange (ZSE) have dropped by 92% to 80 due to restrictive taxes in the capital markets, the bourse’s chief executive officer Justin Bgoni said yesterday.

Bgoni, who leads both ZSE and Victoria Falls Stock Exchange, yesterday told an inaugural capital markets conference in Nyanga the exchanges were lobbying government to remove restrictions that were on capital markets.

“In terms of what we believe has not worked, I think that is something that all of us are worried about. The first one is in terms of restrictive taxes, vesting period and [the] 4% withholding tax,” he said.

“And what it has done is that it has made the markets very unattractive. We have seen that in terms of drops in volume (and) value onto our markets. I think at the moment we are doing maybe 80 trades or so a day.

“We had gone up quite a lot, and we actually started looking at 1 000 trades a day. And when your market is not liquid, it is actually a very bad sign.

“Liquidity is very important to your market. It does a lot of things. It helps in terms of valuation, so it’s difficult to have a good valuation of your equities if your liquidity is low. And also what it does is that it makes it unattractive for people to come in.”

Bgoni said high taxes make it unattractive for people to come and raise capital, resulting in fewer listings coming in.

“So, it is something that we are worried about in terms of getting our liquidity up. There are things that we are doing in getting this done. One of the things that we are doing, and it is not just us, our regulator is doing quite a good job as well, is in lobbying the government to remove the restrictions that are on the capital markets.”

Bgoni said the other thing that was not helping the bourse was the continued suspension of Old Mutual and PPC, saying the two used to be very attractive counters.

“Old Mutual and PPC used to be very attractive counters to our market. And we know that there are people who trusted us with their money and invested into these two equities and at the moment they are unable to realise their value,” he said.

“It has affected pension funds; it has affected retirees, so it is something that we are working very hard to get something done. It is something that is, on a personal note, quite frustrating, because sometimes you believe you are winning and then you realise you are not. So we keep on working behind the scenes to get something done. So I think is something that we know has not worked.”

Bgoni bemoaned the absence of a debt market, telling the government to understand that it made sense to raise money on the capital markets.-newsday