NEW tradable instruments are set to be introduced on the Zimbabwe Stock Exchange as government continues with efforts to raise funds to recapitalise public sector enterprises.
The ZSE and the Reserve Bank of Zimbabwe will soon meet to discuss the proposal which if approved will lead to the introduction of tradable debt instruments.
This will see the stock market trading in bonds and gilts. For example, parastatals such as Zesa might introduce government-guaranteed bonds for trade on the bourse. The facility might also include bonds for local authorities.
Parastatals have in the past been surviving from the fiscus. Most of the state companies are debt-ridden and reeling from mismanagement.
ZSE chairman Bart Mswaka confirmed that the bourse was due to meet central bank officials over the proposed instruments.
“We will be engaging the Reserve Bank of Zimbabwe on the matter and this will also look at the issue of creating instruments that will enable local authorities to raise funds through the ZSE,” Mswaka said.
He said the instruments would allow public enterprises to raise capital through the ZSE.
“We are looking at issues of raising capital for institutions and we believe the ZSE will be able to do so for both the public and the private sector,” said Mswaka.
He said the meeting would tackle the concerns raised by governor Gideon Gono in his monetary policy review last week where he fired a broadside at the ZSE for fuelling speculative activities and inflation.
“We are also going to engage Gono over concerns raised in his monetary policy statement with regards to the operations of the stock exchange and the proposed digitalisation of our trading system,” Mswaka said.
“As monetary authorities, we are expressly concerned that the Zimbabwe Stock Exchange is increasingly turning into an explosive source of imaginary and inflationary wealth being derived from mere trading of paper, without significant direct cash-flow benefits to the underlying listed companies,” said Gono.
Brokers however said the rally on the market was a result of factors related to the economic slowdown. They said Gono was making the mistake of blaming the ZSE in isolation from more important economic fundamentals.
Meanwhile, the market took a knock immediately after the monetary policy statement. Analysts said the market was reacting to the interest rate hike which has seen investors selling large volumes.
The market this week continued to tumble, retreating 79 456,25 points to close Wednesday’s trade at 2 840 275. Significant losses were recorded on Friday after the delivery of the monetary policy review, when the industrial index shed 153 562,20 points.
Losses were recorded in heavy counters Old Mutual, down $3 000 to $47 000, Meikles Africa, down $500 to $11 500 and Finhold, down $330 to $6 500.
The mining index on Friday retreated a significant 31 553,66 points to close trade at 598 815,02.