More mining listings to boost VFEX liquidity

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HARARE – The Victoria Falls Stock Exchange (VFEX) expects increased liquidity buoyed by more listings, which are scheduled to come on board this year, a senior official has said.

A subsidiary of the Zimbabwe Stock Exchange (ZSE), the US dollar denominated exchange was launched in October 2020 to allow companies to raise capital in foreign currency for their expansion projects as well as importation of raw materials and equipment.

ZSE chief executive officer, Justin Bgoni, said more interest was coming from mining firms in particular, as they look forward to unlocking value on the exchange.

“We have a healthy listing pipeline and we anticipate to get more companies especially in the mining sector to list on VFEX during the year,” he said.

Currently, the exchange has four listings – Bindura, Caledonia, Padenga and Seed Co International.

While liquidity remained low on the exchange compared to the ZSE, Mr Bgoni said market activity recorded during the previous year was encouraging.

Three of the counters —Bindura, Caledonia and Padenga — listed in 2021.

“As we get more counters on VFEX, we believe the liquidity will improve and we are working to bring in foreign investors because that will significantly increase liquidity on VFEX.

“As a new exchange, VFEX is performing well considering the increased trading activity and having four listings to date. For the year 2021, we are happy the exchange gained traction as we celebrated three listings,” said Mr Bgoni.

Caledonia Mining Corporation Plc listed in December last year, which was positive for the exchange as investors oversubscribed for its Depository Receipts. The resources group raised US$7,8 million against the planned US$3 million.

Mr Bgoni said while building an exchange and attracting listings was a difficult process, he expressed satisfaction with progress on the VFEX and was upbeat about prospects in the medium to long term.

“We are happy with the progress we have made on the VFEX. Listing on an exchange remains a voluntary exercise and our efforts have been to ensure that there are sufficient incentives to attract listings.

“We appreciate the support from the Government in terms of the incentives that are available to VFEX, ensuring that the exchange is competitive in terms of low transactional costs.

“As VFEX we need to continue to raise awareness on how both local and foreign investors can participate on the exchange and grow the listings,” he said.

The exchange was also introduced to address some of the glaring challenges that businesses and investors faced on the ZSE, which also deterred investments.

The Government put in place a number of incentives to attract listings on the exchange and make it the best in the region.

Experts in the capital markets and mining sector say the exchange has potential to become a game changer in a country endowed with vast mineral resources, due to it trading in hard currency, which provides good funding opportunities for mining firms and is therefore considered an enabler for economic growth.