ZSE slump quenches listing momentum

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THE Zimbabwe Stock Exchange (ZSE) is unlikely to see the same level of interest for listings this year that it did in 2022 due to its recent slump in trading activity, analysts say.
The market last year added four Exchange Traded Funds (ETFs), as well as a Real Estate Investment Trust (REIT).
Before the government put in place measures to “arrest speculation” on the market in May, it had also seen wild movements in prices and heightened activity.
Since May, however, activity and price movements have slowed considerably, and analysts say listings are likely also to be affected in 2023.

“The measures, to some extent, were justified, but an unintended consequence may be a slowdown in listings, just like we have seen with activity in trading and value movements since May last year,” Tendai Ngoma, a local equities analyst, told The Financial Gazette this week.

“With the general sentiment on the market right now, it is not likely that we will see the same kind of energy toward listings that we saw over the past two years.
“It’s clear that the momentum seems to be shifting to the Victoria Falls Stock Exchange (VFEX), even though we have only seen stocks and depository receipts, we will probably start seeing ETFs and REITs on that exchange soon.”

This also comes as equity listings had already dried up on the local bourse, with a number of companies complaining that raising funds on the market is now difficult.

A handful of companies have since moved to VFEX, amid indications that many more could migrate to the US dollar-denominated exchange this year.
The ZSE’s current slump is its longest since 2016 when bond notes were introduced.

The local bourse had trended upwards since then, with inflation — driven mostly by currency ambiguity, which essentially started with the introduction of the pseudo currency — pushing demand for stocks and other non-cash investments.

The measures that were put in place last year include the banning of inter-account transfers between brokers and their clients.
Transfers from a client sub-account were also restricted to the customer’s bank account.

Withholding capital gains tax (CGT) on shares held for less than 270 days was raised from two percent to four percent, and the government later doubled down on this, introducing a 40 percent CGT on securities sold on the exchange within 180 days of purchase.
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