VFEX trades jump 18pc on growing confidence

SECZim said the number of trades between May and August this year increased to 400 from 246 recorded in the first four months to April 2023 (File Picture)

SECZim said the number of trades between May and August this year increased to 400 from 246 recorded in the first four months to April 2023 (File Picture)

Oliver Kazunga-Senior Business Reporter

THE value of shares traded on the Victoria Falls Stock Exchange (VFEX) Direct platform increased by 18 percent to US$52,2 million in the four months to August 2023, a development economic analysts attributed to growing investor confidence.

VFEX Direct is an online and mobile trading platform established in September last year specifically for retail investors to buy and sell securities on the VFEX, a United States dollar-denominated bourse set up by the Government in 2021.

According to the Securities and Exchange Commission of Zimbabwe (SECZim) update for the third quarter to September 2023, between January and April 2023, the value of trades on the VFEX stood at US$43,9 million.

In the same update, SECZim also indicated that the number of trades between May and August increased to 400 compared to 246 recorded in the four months to April.

The number of active clients at the end of the four months to August had increased to 2 942 compared to 1 966 in the four months from January to April.

Economist Ms Chipo Warikandwa said increased investor confidence was one of the major reasons driving the volume of trades on the VFEX.

She said the increased investor confidence was also attributable to the fact that apart from being a United States dollar-denominated stock exchange, the VFEX was a well-regulated market with a strong record of transparency.

“As a result, there has been increased investor confidence on the VFEX which is a positive milestone when it comes to improving or raising the number, value and volume of trading activity on that stock exchange.

“The VFEX also acts as a platform where it is easier for Zimbabwean companies to raise capital that can be invested in expansion projects or opening of new firms while also creating more jobs in the economy. Moreso, the local economy is growing and thus this is leading to increased demand for securities, so taking into account those factors that I have alluded to, the value of securities traded on the VFEX is improving,” said Ms Warikandwa.

In a separate interview, economic commentator Ms Wendy Mpofu said the VFEX was a relatively new bourse but had reached a significant milestone on the local capital markets.

The increase in the number, value, and volume of securities traded on the VFEX is a positive indicator for the Zimbabwean economy and investors.

“As a result, the improvement in the number, value and volume of securities traded on the VFEX for the four months period to August 2023 compared to the corresponding period to April 2023 is due to various factors that include Government support.

“The Government has largely bankrolled the establishment of the VFEX and has therefore taken steps to promote the development of that stock exchange, such initiatives include tax breaks for investors and reducing regulatory burdens on the bourse,” she said.

Ms Mpofu said the VFEX has since its establishment invested towards enhancing its infrastructure as a result distinguishing itself as a more efficient and user-friendly platform where investors can trade easily and thus increasing trading activity on the bourse.

Financial market analyst Mr Grey Munetsi said: “The long-term prospects however remain anyone’s guess as the Government is yet to give definitive indications on the way forward beyond the National Development Strategy 1 framework which is approaching its twilight zone.”

In June last year, the Government gazetted Statutory Instrument 118A of 2022, entrenching the multicurrency system into law and making both the US dollar and Zimbabwe dollar legal tender for all local transactions for the five-year duration of the NDS1, which ends in 2025.

Meanwhile, SECZim indicated that the capital market sector remains strong as at 30 June 2023, as measured by Securities Market Intermediaries’ (SMIs) ability to maintain adequate capital and fair profitability.

During the second quarter, two new Collective Investments Schemes (CIS) were licensed, bringing the total number of licensed CIS to 81 up from 79 as of March 31,2023.

“In other licensing categories, there was one new securities investment management company, one new trustee services company and one new securities investment advisory firm that were licensed during the quarter.

“Two securities investment advisory companies voluntarily surrendered their licences,” said SECZim.

In terms of the securities market performance, the commission said the total turnover for both the equities and exchange-traded funds on the Zimbabwe Stock Exchange (ZSE) amounted to $135,78 billion and $493 million respectively for the quarter ended June 30, 2023.

Real estate investment trusts recorded a total turnover of$1,11 billion on the ZSE. Financial Securities Exchange (FINSEC) recorded a total of $162,05 billion worth of trades whilst, VFEX recorded US$6,61 million from 2 230 trades that went through the foreign currency denominated exchange for the quarter ended June 30, 2023,” it said.


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