The Zimbabwe Stock Exchange (ZSE) is this year looking at diversifying both product offerings and its investor base, as the bourse intensifies efforts to expand offerings on the local capital market.
The initiatives lined up for this year will also look at demystifying capital markets, which have long been regarded as a preserve of the elite and foreign investors. Participation by local retail investors has been very limited.
The local bourse wants to improve this, as well as participation of small-to-medium enterprises (SMEs).
In line with this, the ZSE will also tap into SME financing through operationalising Memorandum of Agreements (MoU) that were signed last year with GetBucks Microfinance Bank Limited and Harare Receivables Exchange Limited.
“We are working on diversifying our investor base, especially by encouraging retail investors to come on board. There are several financial literacy programmes that we will be launching this year. They will demystify the perception that the stock market is elitist,” said ZSE chief executive Mr Justin Bgoni via email.
“As the ZSE, our focus is on the growth and diversification of the exchange and providing value for our stakeholders. To kickstart the year, we adopted the Global Industry Classification Standards (GICS) for ZSE-listed counters, which led to the launch of new indices with effect from January 1, 2020.
“We expect the new indices to provide the market with better tools for performance measurement as well as assist in sector-based investment strategies,” he said.
According to the Reserve Bank of Zimbabwe (RBZ), financial inclusion on the country’s capital markets is at a paltry 1 percent as local retail investors shy away from it.
However, it has also been argued that capital markets are designed for a specific niche market that can handle the risks associated with it, and, therefore, may not be ideal for everyone.
Mr Bgoni indicated that a number of initiatives and new products have been lined up to enhance the attractiveness of the bourse. The initiatives will also inculcate a culture of investing among local retail investors as well as encourage other local companies to participate.
This will be an ideal way of raising capital.
“We are also working on increasing the pool of securities and associated financial products to include specialist securities like Exchange Traded Funds (ETFs) and Real Estate Investment Trusts (REITs).
“We recently received approval from the Securities Exchange Commission of Zimbabwe to launch ETFs and hope to have an ETF listing in the first quarter of 2020,” he revealed.
During the course of the year, the bourse will also offer training courses tailored for capital markets’ products and services that are meant to further assist in demystifying the capital markets. The courses will also assist investors and market participants to make informed investment decisions.
Last year, the bourse held master-classes at which independent power producers (IPPs) were educated on the benefits of the exchange and how they can use it to raise capital for their energy expansion projects.
However, market watchers contend that 2020 is a tricky year as the macro-economic outlook is challenging, with businesses having to be proactive in adapting to change while potential retail investors remain in a fix due to waning disposable incomes.