THE Victoria Falls Stock Exchange (VFEX)’s market capitalisation rose by about 200% to US$1,29 billion in the first half of this year, following an increase in new listings, data from the central bank showed this week.
VFEX, which trades exclusively in US dollars, has attracted several companies this year with a promise to help them raise foreign currency.
Data from the Reserve Bank of Zimbabwe (RBZ)’s mid-term monetary policy statement (MPS) this week showed that there was an increase in market capitalisation despite the bearish sentiments that characterised the bourse in the period under review.
“The increase in VFEX capitalisation was largely attributed to a notable number of new listings, beginning in the year 2023. This culminated in an increase in the number of outstanding issued shares on the VFEX market,” RBZ governor John Mangudya said in his MPS.
As a result of the bearish sentiment, the VFEX’s All Share index declined by 30,56% to close the second half of 2023 at 76,17 points, from 109,69 points recorded in December 2022.
On an annual basis, the VFEX All Share index lost 33,99%, from 115,39 points recorded in June last year.
The VFEX was established in 2020, operating out of the Victoria Falls Special Economic Zone.
The platform provides an avenue for international investors into Zimbabwe without the associated currency risk.
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It has seen an upsurge in investor interest after enduring a frustrating 24 months marked by investor caution.
A total of 14 counters are listed on the bourse, with management targeting to close the year with at least 20 listings as it continues to make headway in attracting new listings.
The listings are expected to come from initial public offerings, real estate investment trusts, and exchange-traded funds, according to VFEX chief executive officer Justin Bgoni.
However, the Zimbabwe Stock Exchange’s first half was largely characterised by speculative tendencies as investors sought safe haven in selected stocks with strong balance sheets.
This was due to limited investment options on the money market.
All the major indices registered gains in the period under review.
The bourse’s resources index increased by 106% to close at 76 960,49 points, compared to 25 487,77 points recorded during the prior comparable period.
FBC Securities said in its first half review that the stock market will remain vulnerable to local economic developments in the second half of this year, including policy interventions that may affect liquidity conditions and business performance.
This is coming as liquidity conditions in the economy continue to have a strong impact on market performance.
“Presented with continuous currency devaluation and prevailing uncertainty ahead of elections, we maintain the view that investors should boost the resilience of their equity portfolios by focusing on a combination of high-quality counters and consistent dividend payers,” the firm said.
“Ahead of the 2023 general elections, we expect a cautious sentiment to prevail among investors as they continue to assess the impact of the elections on business.”
