The Zimbabwe Stock Exchange chief executive officer Mr Justin Bgoni says the Government could make Victoria Falls a Zimbabwean “Hong Kong” and transform it into a magnet for capital, as the country leverages on capital markets for economic growth.
This comes as capital markets are, the world over, recognised as enablers for funding businesses, infrastructure projects and general economic growth.
Speaking at the Zimbabwe Economic Development Conference (ZEDCON) in Victoria Falls last week, Mr Bgoni highlighted this can be achieved with the Government taking a leading role in listing financial instruments on the exchanges.
One of the first steps towards this would be for the Government to issue Bonds and Treasury Bills on the Victoria Falls Stock Exchange (VFEX) as well as encourage State-owned enterprises to list on the US dollar-denominated exchange, subsequently making it a vibrant exchange.
He cited Hong Kong Stock Exchange (SEHK) as an example that boasts 96 China state-owned enterprises and 50 have at least one subsidiary listed on that stock exchange.
Of the ten largest initial public offering (IPO) funds raised by newly Hong Kong-listed companies since 1986, eight were Chinese state-owned financial institutions and enterprises. It is now home to 250 H-share Chinese companies and another 171 red chip firms that are controlled by the Chinese state, with a combined market capitalisation for these entities pegged at HK$12 trillion (about US$1,54 trillion), more than one-third of SEHK’s total market capitalisation.
In light of this, Mr Bgoni said Victoria Falls could be turned into a vibrant capital markets hub critical in funding the country’s growth through resourcing the Victoria Falls Offshore Centre as well as issuing rules that include low exchange controls and foreign ownership.
This is in addition to tax incentives to list on the Victoria Falls Stock Exchange (VFEX) and establish Treasury companies and funds in the offshore centre as well as automatic prescribed asset status for Zimbabwean infrastructure projects listed on VFEX.
Mr Bgoni maintained the role of capital markets cannot be overemphasised.
“Capital markets are part of the financial markets which connect the real sectors of the economy to the providers of capital
“Capital markets enable the contractual savings industry (pension and provident funds, insurance companies, medical aid schemes, collective investment schemes,) to mobilise long-term savings from small individual households and channel them into long-term investments,” he said.
According to the Insurance and Pensions Commission, (IPEC) figures, 50,49 percent of the $488,12 billion pension funds assets were in quoted equities as of June 2022.
World over, capital markets provide equity capital, debt capital and infrastructure development capital that have strong socio-economic benefits through development of essential utilities such as roads, water and sewer systems, housing, energy, telecommunications and public transport.
Across the region, in 2019 Kenya successfully raised US$2,1 billion through Eurobonds listed on the London Stock Exchange while in 2018 the City of Johannesburg successfully listed a R1,46 billion (about US$100 million) green bond on the JSE.
The bond was used to fund climate change mitigation strategies, especially those that include greater use of gas and natural energy. In November 2012, the City of Lagos issued a US$510 million bond for infrastructural development which was listed on the Nigeria Securities Exchange.
Meanwhile, weakness persisted on the ZSE during a holiday-shortened week to Wednesday, which saw the primary indicator the ZSE All-Share Index fall 2,7 percent to 15 654 points. The ZSE Top 10 Index gave up 3,4 percent to 9 572 from 9 910 points recorded in the prior week.
At 10 587 points, the ZSE Top 15 Index was 3,1 percent below prior week level. The Medium Cap ended the week at 31 779 points, which was 1,2 percent below comparable week.
The Small Cap eased 1,2 percent to close pegged at 511 934 points compared to 518 371 points. Total market value ended the week 5 percent lower to $1,9 trillion reflective of the losses recorded especially by the big-cap counters. Banking firm NMB led the week’s top fallers with a 15 percent decline to $17 followed by peer FBC, which fell 14 percent to $8,53. Property firm Mashonaland Holdings fell 13 percent to $4,33 while clothing retailer Truworths gave up 7 percent of value to $1,85.
Further losses were offset by gains in Unifreight, which put on 14 percent to $50 followed by GetBucks, which added 13 percent to $17. At $2,50, Ariston was 6 percent above prior week while Econet rose by the same margin to $159,06.
On the VFEX, Padenga was the only counter to trade rising 2,63 percent to US33,2 cents on 1000 shares, while Seed Co International remained flat in Wednesday’s session.
The duo of resources groups Bindura and Caledonia remained flat as Caledonia reported gross profit for the quarter to June 30, 2022, jumped 28,8 percent to US$17,9 million from US$13 million during the same period in the prior year, as its local unit Blanket Mine achieved record production for the quarter. – Sunday Mail