TREASURY says it plans to expand Victoria Falls Stock Exchange (VFEX)’s scope to trading instruments like exchange traded funds (ETFs) of the biggest listed global stocks.
The plan is meant to attract capital, according to Mthuli Ncube, the minister of Finance, Economic Development and Investment Promotion.
The US dollar indexed VFEX was launched in October 2020.
There are 15 counters listed on the bourse with a combined market capitalisation of about US$1,19 billion as of Monday this week.
“There is something else we want to do,” Ncube told a two-day investment summit in South Africa last week.
“We want to make sure that if you want to buy stocks in China, you do not have to go to the Shanghai Stock Exchange, and we want you to come to the VFEX.”
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The summit was hosted by the South African diaspora in partnership with the Ministry of Finance, Economic Development and Investment Promotion, and other partners.
Treasury is hoping to expand the VFEX’s offering to include foreign non-domiciled companies to attract market participants.
“So, we are going to work hard to list what we call, ETFs, global ETFs, exchange traded funds on the Victoria Falls Stock Exchange. You will be able to buy global stocks on an exchange here in Africa and it’s great for pension funds,” Ncube said.
“You get to diversify in something that is low risk and has exchange control and zero capital gains.”
An ETF is a pooled investment security that can be bought and sold like an individual stock.
The Treasury boss has been pushing for pension funds to channel their liquidity into a listed ETF provided there was value in them.
“We want you to come to Victoria Falls if you want to invest globally. If you go to Dubai, you can even list a single stock ETF,” Ncube said.
“There is no reason why you cannot list an Apple ETF, a single stock ETF so you do not have to buy it in New York. You can buy it in Victoria Falls. We are very serious, and that is the vision of this exchange.”
The American technology firm, Apple, was valued at US$2,78 trillion as of Monday, the second most valuable firm in the world after fellow tech firm, Microsoft, which was valued at US$3,07 trillion.
ETFs, according to Investopedia, can be structured to track anything from the price of a commodity to a large and diverse collection of securities.
“ETFs can even be designed to track specific investment strategies. Various types of ETFs are available to investors for income generation, speculation, and price increases, and to hedge or partly offset risk in an investor’s portfolio,” Investopedia says.
In theory, it means global indexes such as the S&P 500 Index that tracks the top 500 listed firms in the United States can be made into an ETF and listed on the VFEX.
“We now need to make use of our ETFs, our Exchange Traded Funds programme to attract listings on VFEX for foreign stocks,” Ncube said.
He added that they would shortly be establishing a commodity exchange.