THE Zimbabwe Stock Exchange (ZSE) will from next month replace the dual trading session with a single call session in a move that is expected to alter the trading
pattern of investors.
In a memorandum written to stockbrokers on Wednesday, ZSE chief executive Emmanuel Munyukwi said the introduction of the morning-only sessions was meant to ease pressures of increased volume of trading on the local bourse, which often resulted in administrative errors.
This means that investors will now only have one chance in the morning to trade their shares. In the past the ZSE used to have two trading sessions (calls) — one in the morning and the other after lunch.
“In order to improve the smooth running of the price discovery mechanism and to enable the Zimbabwe Stock Exchange to produce reports timeously, the committee has agreed to a single call over session commencing daily at 10.00am with effect from 1 February 2008,” reads the memo.
The single call over session comes at a time when the local bourse has been criticised for failing to bankroll the computerisation project.
Unlike at other regional and international stock exchanges, the ZSE still lags behind as transactions are being done manually. Munyukwi said the volume on the market has over-stretched the ZSE systems.
“The increased trading activities have stretched the resources of the Zimbabwe Stock Exchange to the limit,” said Munyukwi.
However, some market watchers have described the development as a “market correction” that would affect market speculators ahead.
“Look at it this way, the market is currently valued at US$4,4 billion and last year average market capitalisation was US$3,5 billion. A market portfolio performed 76% in US dollar terms last year and that cannot be sustained, especially when there is no real growth in output from the listed companies,” said an investment analyst with a local stockbroking firm.
“This is some sort of market correction and may be extended way in to March,” said the analyst.
The proposed single call over session is expected reduce the cumbersome task of reconciling transactions as well as minimising speculative tendencies. Other analysts however said the two trading sessions were important for decision making and communication between brokers and clients.
“The one call session is not a true reflection of how the market has reacted. Currently most stockbrokers use the morning session to inform clients before an anticipated rally,” said another analyst.
He said performance on the market is likely to remain largely buoyant on the back of increased monetary growth.