THE Victoria Falls Stock Exchange (VFEX) faces major hurdles going into the New Year with broad macro-economic challenges that are engulfing the economy affecting the bourse.
A subsidiary of the Zimbabwe Stock Exchange, VFEX is expected to provide a gateway for companies in Zimbabwe, Sadc, and the rest of Sub-Saharan Africa to raise capital in foreign currency.
It is also expected to provide investors an opportunity to trade in the secondary market in hard currency implying that global companies invested in Zimbabwe can now seek a listing on VFEX.
However, two months after its launch there is still only Seed Co listed on the exchange and limited public information on expression of interest by other investors.
The platform was launched as a mechanism to allow trading in foreign currency after three fungible stocks, Old Mutual, PPC Limited and Seed Co were suspended as they were accused of manipulating the exchange rate.
PPC and Old Mutual are also expected to join the platform.
While the central bank has issued a directive that will allow repatriation of foreign currency from the platform, analysts say a stable economy was key to unlocking investors on VFEX.
Morgan & Co Heard Researcher, Batanai Matsika told businessdigest that trading activity was still very low.
“At the moment we just have one but there has been talk of PPC and OM joining. Remember these are counters that have been suspended on the ZSE because of currency issues. There have been negotiations but we are not sure if they will join the party. There are efforts now by the Ministry of Finance and capital market players to attract more issuers. The strategy is to bring in more miners on that platform, but of course it’s a hard sale given broader macro-economic issues that still exist, but we are still watching the market,” he said.
Matsika said over the past year, the policies that came into play were on the monetary side and capital markets were hampered by restrictions.
“We also saw new products, the launch of the Victoria Falls Stock Exchange. The macro picture given the shocks the economy shrunk and the Ministry of Finance has put a 4,1% estimate (of economic contraction in 2020) but we think it’s more than that . We think it’s a six or 7% decline.” he said
Markets analyst George Nhepera said as long as the economic outlook in 2021 remains stable, characterised largely by a predictable policy environment, then it was likely that investor’s confidence in the stock exchange will grow leading to the listing of more companies
“The country desperately needs foreign direct investment which in this case could be channeled into the country though VFEX. What attracts investors to the stock exchange is the denomination of its listed shares in foreign currency thereby eliminating foreign exchange losses,” he said. — Staff Writer.