ZSE market turnover more than doubles

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HARARE – Monthly turnover for February on the Zimbabwe Stock Exchange more than doubled to $24 billion from $11 billion in January 2023 despite two firms, Axia and Innscor, delisting from the bourse.

The two top-cap stocks have migrated to the Victoria Falls Stock Exchange (VFEX) in a move expected to unlock value and increase their regional profile, hence attracting more investors and also enjoy a host of incentives.

The VFEX platform offers a number of incentives, including tax exemptions on capital gains and the ability to repatriate funds, which has been a challenge for investors in recent years.

Investors participating on the VFEX benefit from the ability to move capital and dividends freely, low transaction costs, tax incentives and minimal currency risks.

Market watchers contend the migrations are likely to continue going forwards as counters seek currency and exchange rate stability, in addition to the ability to raise capital in foreign currency for their various projects.

“The number of listings on the VFEX is expected to continue to grow this year as a result of existing local currency dynamics and unpopular policy intervention on the ZSE. A number of companies, including African Sun, have already communicated intentions to migrate to VFEX.

“Migration of quality stocks from the ZSE to the VFEX, as opposed to new listings, may however be detrimental to the viability of the local currency denominated bourse,” said FBC Securities.
Total market value on the ZSE grew marginally, surging 2,91 percent from $2,40 trillion to $2,47 trillion over the month of February, although two of the major counters had delisted.

However, in real terms, using an effective exchange rate the market cap slightly decreased by 7,02 percent as the local currency depreciated faster than the market cap recovery rate.

According to IH Securities, the stock market closed the month of February at a market cap of US$2,19 billion, trending below the five-year average market cap of US$4 billion.

Average daily value traded for the month of February increased from an equivalent of US$0,39 million in January, up to US$0,82 million.

Total volumes traded were also up 56 percent to 14,80 million.

On the VFEX, monthly turnover closed the month of February at US$614 000, which was 4 percent below the US$640 000 recorded in January on the VFEX.

However, volumes more than trebled to 4,4 million compared to 1,8 million in the previous month.

Market capitalisation ballooned by 58 percent to $1 billion from $631 million after Axia and Innscor migrated to the exchange.

“We have been observing capital appreciation of counters migrating from the ZSE due to exchange rate disparities.

“We are of the view that this prevailing situation will be sustained at least in the short-term presenting an opportunity to register gains for companies moving from the ZSE onto the VFEX,” said IH Securities. – Herald