ZSE’s improbable 2018 record

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THE Zimbabwe Stock Exchange (ZSE) had an eventful 2018, breaking a number of records including the improbable feat of most listings in a year since the market’s rebasing in 2009.
The local bourse welcomed four counters during the year, namely Old Mutual, First Capital Bank (FCB), SeedCo International (SeedCo) and Cassava Smartech Zimbabwe (Cassava).
Listing in a difficult environment is improbable because the most common reason for listing is to raise funds for growth, and a growth strategy is unlikely in hard times.
Things were very difficult for local businesses in 2018 with an intensifying economic crisis characterised by foreign currency shortages and inflation.
Bartholomew Mswaka, the ZSE’s board vice chairman, said the development ought to be celebrated because it was in defiance of adverse conditions.
“The exchange has had four listings this year. This is a new record for the market since the introduction of the multicurrency system in 2009.
“Despite the challenging business environment, investors and entrepreneurs continue to show confidence in the country and the ZSE. This is positive news that should be cascaded across the world that Zimbabwe and indeed our capital markets are open for business,” Mswaka said recently at the official listing ceremony of Cassava Smartech Zimbabwe.
The four listings however all resulted from corporate restructures and not the typical initial public offerings.
In June, the exchange listed Old Mutual in a secondary listing after Old Mutual Plc returned to its South African roots in a move which largely completed the financial services group’s major overhaul.
Following the restructure, Old Mutual, which is now the parent to what is left of Old Mutual plc, will have a primary listing on the Johannesburg Stock Exchange, a standard listing in London, and secondary listings on the stock exchanges of Malawi, Namibia, and Zimbabwe.
In October, the ZSE listed FCB following the approval of the bank’s name change from Barclays Bank Zimbabwe.
This came after Malawi Stock Exchange listed FMB Capital Holdings acquired a 42 percent stake in the bank from Barclays Bank PLC in October 2017, kicking off a transition which the parties said would see the bank switching from Barclays to FMB branding over a period of three years.
During the same month, Zimbabwe’s largest seed maker, SeedCo Limited’s partial unbundling came to fruition with the primary listing of spin-off SeedCo on the Botswana Stock Exchange.
SeedCo also got a secondary listing on the ZSE, where the parent company already trades.
Finally, in December, the market listed Cassava after the technology company’s demerger from Econet Wireless Zimbabwe.
Meanwhile, in October, the ZSE reached its highest ever market capitalisation of $23,2 billion after opening the year at $9,6 billion. This came after the stock market became a default last resort hedge avenue for investors amid a monetary crisis characterised by currency risk and inflation.
Value traded on the ZSE in 2018 also came in at a record high of $926,3 million.
Mswaka says the exchange will remain relevant.
“The ZSE is working on a framework for the listing and trading of new securities such as Real Estate Investment Trusts and Exchange Traded Funds.
“The ZSE also recently revised its listing requirements for the main board and once the proposed amendments to the Securities and Exchanges Act are finalised, you can expect a set of regulations that are more tuned to the current environment,” he said.
The exchange also made considerable strides towards this thrust in 2018 after it launched mobile trading for the first time.
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