eBusiness Weekly
Nelson Gahadza
Business Writer
The Zimbabwe Stock Exchange (ZSE) has introduced the Zimbabwe National Stock Market Index (ZNSMI), designed to track the performance of companies listed on the ZSE, Victoria Falls Stock Exchange (VFEX), and Financial Securities Exchange (Finsec).
The new index, which became effective January 2, 2024, has key features that include inclusive representation, encompassing companies listed on ZSE, VFEX, and Finsec, and offering a comprehensive view of the market’s performance across these major exchanges.
ZSE chief executive Justin Bgoni said in a statement that the index will be calculated using the market capitalization-weighted method, providing an accurate reflection of the dynamics of the local stock market with emphasis on each company’s market value.
In terms of base and denomination, Bgoni said the index would commence with a base value of 100 basis points and will be denominated in USD, making it easily accessible and comparable for both domestic and international investors.
He noted on currency conversion that market capitalization for companies listed on ZSE and FINSEC will be converted to USD at the prevailing exchange rate, ensuring a consistent and transparent valuation process.
“The launch of the Zimbabwe National Stock Market Index underscores our commitment to promoting transparency and growth within the Zimbabwean capital markets.
“This index is poised to serve as a vital tool for investors, analysts, and other stakeholders in assessing and tracking the overall performance of the Zimbabwean stock market,” he said.
According to the market regulator, the Securities and Exchange Commission of Zimbabwe (SECZ), market turnover for 2023 currently stands at US$173 million, the third lowest since 2009, despite the market registering an increase in security dealers and financial advisors.
SecZim said despite the signs of a market that is struggling, where market capitalization currently stands at around US$2,79 billion from a peak of more than US$6 billion, the stock market, however, has great potential.
The market last year witnessed the slowly evolving Real Estate Investment Trust (REIT) market as a viable capital market instrument, and its potential market size is estimated at around US$40 billion.
A REIT is a company that owns and typically operates income-producing real estate or related assets, for which units of an investment pool are created and sold to investors in the same way as company stock.
The Tigere REIT pioneered the listing of REITS in the market in November 2022, and the Revitus REIT became the second listing by December 18, 2023. This is in addition to the already-registered seven REITs expected to be listed this year.
The government has since committed to supporting new market product development through tax incentives and ease of doing business.
