eBusiness Weekly
Enacy Mapakame
The Zimbabwe Stock Exchange (ZSE) registered a 250 percent growth in profitability for the year to December 31, 2022 as the exchange implemented several initiatives to broaden the market.
Total income jumped 42 percent to $2 billion on the back of growth in listing fees. The VFEX contributed 5 percent to the group’s total income. The US dollar denominated exchange closed the year with eight counters and is expected to continue attracting quality stocks.
Total comprehensive income for the year came in at $627,4 million despite the challenging environment. Non-current assets increased by 42 percent reflecting the expenditure incurred during the year including investment toward VFEX Direct and a commodities exchange.
The group committed a total of $327 million to capital expenditure and $715,5 million in financial instruments to diversify the financial risk.
During the year under review, the ZSE introduced new products and services as initiatives to diversify its offerings to broaden the scope of the market and enhance investor participation on the bourse.
The bourse witnessed its first Real Estate Investment Trust (REIT) listing – the Tigere REIT, while four other Exchange Traded Funds (ETFs) were also launched during the year bringing the total to five.
Additionally, the company also launched the ZSE Direct and the VFEX Direct android and iOS applications as part of initiatives to broaden accessibility of the CFEX Direct platform.
Despite these initiatives, the exchange did not have an easy year. The business environment remained challenging for the bourse as the country faced complex fiscal and macroeconomic balances.
During the period under review, the inflationary pressures put a strain on the business as foreign obligations required more local currency to be settled, although the auction system assisted in offsetting some of the challenges.
Additionally, the promulgation of SI 103A which aimed at curbing speculative trading on the bourse, also had an adverse impact on performance as the market panicked causing a dip in both volume and value.
“The operating environment was drastically affected by domestic and international macro-economic developments that greatly impacted the group’s performance over the review period,” said ZSE chairman Caroline Sandura.
During the year, the primary index, the ZSE All Share Index, jumped 80 percent to 19,493 points, but was outpaced by inflation as the consumer price index for the year, rose by 244 percent on a year on year basis to close at 13,672 points as at December.
However, total turnover for the year more than doubled to $132 billion compared to $65 billion recorded in the prior year. The ETFs and REIT markets contributed $723 million and $451 million respectively.
According to the ZSE, overall market liquidity improved to 6,56 percent compared to 4,95 percent in the prior year.
Lafarge Cement, now Khaya, recorded the highest liquidity on the back of its takeover deal by Fossil Fuel Group, followed by Turnall, GB Holdings, Mashonaland Holdings and Hippo in that order.
On the VFEX, its VFEX Direct helped increase the number of retail investors as it closed the year with 1 000 active users on the platform.
While the year 2023 is expected to remain challenging characterised by currency volatility, inflationary pressures and waning disposable incomes, management at the ZSE are upbeat of expansion of the markets with more listings expected on both the main bourse and the VFEX.
This year, the ZSE expects another REIT and initial public offering (IPO).
“The VFEX will continue to grow as a platform to raise capital in USD or other currencies. The year ahead will see among other strategic pursuits, the diversification of products on the ZSE, more listings and improved liquidity on the VFEX,” said Sandura.
