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IN a year in which stock market punters watched US$1,4 billion worth of investments go down the drain, 2015 also had its ups for the Zimbabwe Stock Exchange.
This is the year that saw the bourse make great strides, expanding and simplifying Zimbabwe’s capital markets; the year that the ZSE dumped manual trading in favour of electronic; the year that ended a long-standing listing drought.
It could be a year of mixed fortunes, really, and in many respects, it is.
As at December 23, the ZSE’s mainstream industrial index had tumbled 30 percent year-to-date as heavyweight counters took a battering all year round.
The mining index, of just four counters, crashed 72 percent on falling global commodities prices as the ZSE total market capitalisation tanked 31 percent.
These figures are unlikely to change in any significant way as 2015 draws to a close, experts say, capping a year of massive losses.
While stocks struggled, authorities at the stock exchange looked beyond the carnage, implementing various plans that upgraded the bourse to international standards and diversified capital markets.
Automation
The ZSE is now fully automated, transforming from manual-based trading to the more efficient electronic trading system.
“Looking at the volumes in terms of turnover over the year, we are way below our normal turnover,” said Mr Alban Chirume, chief executive of the ZSE, in an interview.
“We are below 50 percent and that is a significant drop from a year ago where we had over US$450 million, and the year before we had about US$485 million.
“However, from the preparatory side, we have automated. Normally automation gives a platform to gear up when everything is working correctly. So we are ready to gear up now, we are fully automated — real time connection to the Central Securities Depository.”
The automated trading system (ATS) is the front end of the trading cycle, and the CSD the back-end, mandated for settlement of both scrip and cash.
The ATS reduces the settlement period from seven days to three days, meaning investors get paid sooner in the event of a sell or receive their stocks quicker in case of a buy.
Also, dealers no longer have to be physically present on the trading floor to conduct business, as the case was during the manual call over system where brokers shouted and completed vast paper work to settle trades. Now, they can transact from anywhere.
In June, the exchange moved from 101 Nkwame Nkrumah Avenue, in Harare’s Central Business District, to offices acquired in Borrowdale, helping cut operating and rental costs.
“We are now in our own property, no more rentals even though there are still some power issues posing a small impact on costs,” said Mr Chirume.
On poor equities performance this year, the chief executive said: “That has been driven by low trades. Most of our income comes through the transaction trading and that has dropped significantly with how companies have performed while foreign investors have taken their money out (of the market). That has hit us badly.”
Listings
In 2015, the ZSE ended a three-year listing dry spell with the coming on board of plastic products manufacturer, Proplastics Ltd in June, and fast foods business operator, Simbisa Brands Ltd in November
The two entities were spun off from their respective parent companies, Masimba Holdings Ltd and Innscor Africa Holdings Ltd.
Simbisa Brands Ltd operates fast foods outlets Chicken Inn, Pizza Inn, Creamy Inn, Steers and Nandos.
Early next year, the ZSE will see the first listing in many years by way of an initial public offering from GetBucks, a micro-finance lender.
GetBucks seeks to raise $3,2 million in the IPO — a sale of a company’s shares to the public for the first time — which opened on December 7 and closes on January 8, 2016.
“In terms of listings, we have managed to do two listings, effectively they are three because the GetBucks one was approved this year. So for us that has been a successful year to be able to list in a long time,” said Mr Chirume.
Going public helps companies raise capital from shareholders cheaply, while transparency and accountability improve.
New products
The ZSE is awaiting regulatory approval for the debt market and the Zimbabwe Emerging Enterprise Market (ZEEM).
The ZEEM will enable small to medium enterprises to trade on the bourse in line with regional and international trends where alternative markets are set up to nurture smaller companies while broadening the investment choices available.
The debt market is a regulated financial system allowing the public and private sectors to raise money through issuance of debt instruments. It provides investors seeking to diversify their portfolios and minimise risk, particularly from the volatile stock market, more options.
“In terms of our products, we are waiting for approvals on the debt market and the Zimbabwe Emerging Enterprise Market. We are hoping there will be movement from the regulator,” said Mr Chirume.
Prospects
Year 2016 might not bring big smiles to investors on the local bourse in the absence of economic growth stimuli.
All things being equal, the market will likely maintain current performance levels with bears dominating on low trades, deflationary pressures, liquidity challenges and the falling global prices of commodities.
“If the situation remains as it is, from a conservative side, we see ourselves operating at levels almost similar to this, which is a turnover of below $450 million,” said Mr Chirume.
He hopes new Government strategies on resolving Zimbabwe’s near $10 billion debt, inclusive of interest, will boost confidence in equities in 2016.
Finance and Economic Development Minister Patrick Chinamasa has announced plans to repay a $1,8 billion debt owed to the African Development Bank, the IMF and World Bank in the first half of 2016, which should open new lines of cheap financing.
Online Reporter