Invest in less liquid counters—CDC

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Underperformance of the Zimbabwe Stock Exchange and huge voids in the property sector has seen most insurance companies reducing their exposure to traditional assets

CHENGETEDZAI Depository Company (CDC) is encouraging investors to look at less liquid counters to dematerialise their securities as statistics show steady improvement for the most actively traded counters.

Melody Chikono

In H1 2018, the average dematerialisation penetration ratio (demat ratio) across all counters increased marginally to 40% from 39% as at May 31, 2018.
Dematerialisation is the process by which physical share certificates held by an investor are converted into an equivalent number of securities in electronic form and credited into the investors’ demat account.

In a trading update for H1, CDC chief executive Campbell Musiwa said dematerialised securities accounted for 49% of the Zimbabwe Stock Exchange (ZSE) equities market capitalisation as at June 30, 2018.

During the period, market capitalisation of the ZSE retreated for the first time in four months, declining by 4% to US$ 9,885 billion from the US$10,393 billion recorded as at May 31, 2018.

The market was affected by profit taking and possible election-related caution from some players as the country’s harmonised elections beckon.

The market value of the securities placed on the CSD also declined by 6% to US$4,794 billion during the period from US$5,093 billion.

The cumulative number of securities deposits processed since going live is now 64 285 after CDC processed 2 500 securities deposits in June 2018.

“Monthly turnover increased for the fourth consecutive month despite the market trading in negative territory in June 2018.

The ZSE equities market recorded a turnover figure of US$72,988 million. This is the highest figure that has been recorded in 2018. There was a 21% increase in turnover compared to the May 2018 figure of US$60,284 million,” he said. The CSD received and processed 2 346 ZSE trades in the month of June 2018. The total number of trades processed in 2018 now stands at 9 665.

Meanwhile, Musiwa said the company would in H2 2018 focus on exploring the introduction of turnaround trading and securities lending and borrowing.
“A number of stakeholder consultations are expected around these products in the coming months.

Efforts towards the on-boarding of additional debt securities will also continue as the company seeks to take advantage of the already installed Fixed Income Securities module,” he said.

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