VFEX: Mixed year for equities market

The Victoria Falls Stock Exchange (VFEX) was a winner in 2022 in what was an exciting but mixed year for the equities market.

Overall, the equities market had a roller-coaster of a year, with share price fluctuations experienced, especially on the primary bourse, the Zimbabwe Stock Exchange (ZSE).

Listings, de-listings and migrations were the buzzwords for the year.

New product offerings have been added to the exchanges to deepen capital markets and make them a preferred investment option for both institutional and retail investors.

The ZSE added four Exchange Traded Funds (ETFs) to its portfolio, namely, Morgan & Co Made in Zim, Morgan & Co Multisector, Datvest and Cass Saddle ETFs, bringing them to five.

Another key highlight of the year was the listing of the first Real Estate Investment Trust (REIT) —  the Tigere REIT. It was listed on November 30, 2022 on the ZSE.

But that is not all.

The same exchange has also seen counters delist for relisting on the VFEX, with experts saying the VFEX’s currency of trade, combined with other policy incentives, makes it a logical destination for any local and possibly some international companies to raise capital or to list by introduction.

The VFEX allows businesses to raise capital in foreign currency; and has lower trading costs of 2,12 percent compared to 4,63 percent on the ZSE.

This year alone, the VFEX has listed the Nedbank ZDRs, while Simbisa Brands Limited listed on December 2, 2022.Karo Mining Holdings listed its Bond to raise US$50 million on December 14, 2022, whose proceeds will partly fund its open pit asset located on the Great Dyke.

Food processor National Foods also bade farewell to the ZSE and relisted on VFEX on December 23, 2022. At the moment, GetBucks, Axia and diversified industrial conglomerate Innscor have also expressed interest to migrate to the US dollar-denominated exchange.

The new listings on the VFEX have seen its total market capitalisation balloon to US$475 million by year-end.

Experts project more listings on the VFEX, as businesses seek to unlock value and raise capital for their projects while the ZSE has largely remained undervalued.

“There is a marked trend in the ZSE-listed companies migrating to the VFEX, which is to be expected albeit liquidity will take some time to build,” said stockbrokers IH Securities in a macro-economic update.

The migration trend also comes as businesses say they have been severely undervalued on the ZSE, another inspiration for migration to the VFEX.

In US dollar terms, the market’s top caps like Delta, Econet, and Hippo have dropped 64 percent, 84 percent and 85 percent on a year to date basis, while Innscor and BAT have dropped 38 percent and 85 percent, respectively.

Total market value has dropped 76 percent to US$2,8 billion from a high of US$10 billion in April 2022, before the Government announced measures to tame inflation and speculative trading on the bourse.

On the ETFs, the Cass Saddle and Morgan & Co Made in Zimbabwe ETFs have jumped 5 percent and 13 percent, respectively, in US dollar terms.

The Datvest, Morgan & Co Multi-Sector and Old Mutual have retreated by 69 percent, 62 percent and 77 percent, in that order.

On the VFEX, Bindura, Caledonia and Nedbank ZDR have jumped 159 percent, 521 percent and 425 percent, in that order.

Padenga and Seed Co International have surged by 574 percent and 563 percent, respectively, while Simbisa has dropped 10 percent since listing on VFEX. – Business Weekly

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