Three counters head for VFEX

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Victoria Falls Stock Exchange

BY SHAME MAKOSHORI
THE Zimbabwe Stock Exchange (ZSE) yesterday projected a fine run for its Victoria Falls Stock Exchange (VFEX) this year, with three companies ready to list on the bourse.

VFEX, which exclusively trades in United States dollars, is a subsidiary of the ZSE. It kicked off trading in October 2020 under a cloud of uncertainty brought about controversies that surrounded its founding – the expulsion of financial services outfit Old Mutual, cement maker PPC and seed maker SeedCo International by Zanu PF from the ZSE in June 2020.

Facing allegations of abating serious exchange rate volatilities, the blue chips were directed to joined the VFEX, which at the time was still an idea. Zimbabwe’s newest bourse then ran through a frustrating listing drought until Padenga Holdings Limited and Bindura Nickel Corporation moved across from the ZSE and gave it a chance. New York Stock Exchange-listed Caledonia Mining Corporation also sought a secondary listing on VFEX in 2021, joining SeedCo International, which joined at inception.

In a ZSE annual report for the year ended December 31, 2021, chief executive Justin Bgoni said despite being held back by a few hurdles, interest in the ZSE had been building up since January, spurred by a string of incentives lined up by the government. He, however, did not disclose the identity of the firms. However, he projected a year of high activity on both bourses.

“Prospects for VFEX are also good with the possibility of up to three more listings during the year,” Bgoni said while sharing the ZSE’s financial statements for the review period.

“Since its inception in October 2020, there has been growing interest from the market to understand how the market works. Focus by investors and issuers is always on the exchange’s value proposition and we are pleased to report that the 100% retention of export proceeds on additional output after being listed on VFEX remains the main attraction for issuers.

“Investors continued to enjoy the lower transaction costs on the trading side. Foreign investor appetite across all emerging markets economies remains low and this has not spared the VFEX. However, the local demand for USD assets is very high and has resulted in lower activity level,” Bgoni added.

“Despite the growth on the listings, trading activity was subdued and this was on the back of institutional investors tightly holding on the USD assets. Investors prefer holding stock in dividend paying companies, therefore, this also contributed significantly in the lower trading levels,” he added.

In a new report obtained by NewsDay Business yesterday, the Finance ministry said a bull run experienced on the ZSE during the first quarter of this year was in line with projections. The ZSE’s All Share Index closed the first quarter of this year at 15 858,92, a 46,5% increase relative to the last quarter of 2021.  A report released by the Finance ministry this week said this was driven by rising interest in blue chip companies which registered a 53,8% growth.

“The mining index registered a 28,15% improvement ending the quarter at 10 015,94 points as compared to 7 815,37 points during the fourth quarter of 2021,” the report said.

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