daniel chigunwe
Nelson Gahadza
National Foods says it is considering delisting from the Victoria Falls Stock Exchange (VFEX) after trading its shares on the bourse for less than two years.
A subsidiary of Innscor Africa, National Foods is Zimbabwe’s largest food manufacturer and produces snacks, biscuits, pasta, sugar beans, baked beans, popcorn, as well as soap and a full range of animal feed.
The company listed on VFEX in January 2023, saying the move would help the group raise capital in hard currency and benefit from several incentives offered by the bourse.
In a cautionary statement, the company said further details of the transaction would be provided to shareholders once all regulatory processes and further deliberations have been finalised.
“Shareholders are therefore advised to continue to exercise caution and consult their professional advisers when trading in the company’s shares,” reads the statement.
Since its inception in October 2020, VFEX has seen listings from various sectors such as mining, financial services, tourism, hospitality, and clothing.
Analysts contend that the bourse has not yet realised its potential as it is largely characterised by low trading activity.
Imara Asset Management, in its quarterly investor notes report, said relative to deeper regional and global markets, Zimbabwe’s asset markets remained too narrow and relatively illiquid to afford the comfort to trade in and out of different assets to suit the short-term situations prevailing at any particular time.
It said migrations to the VFEX accompanied by the exit of foreign shareholders had pushed trading activity lower, with trading volumes and values at close to a third of historic numbers, in the process making the markets more illiquid.
“Further, trading in Zimbabwe remains relatively expensive, which our clients cannot afford. For example, having doubled Capital Gains Withholding Tax (CGWHT) for assets held for less than nine months, trading activity diminished and, in most cases, resulted in depressed share prices.
“This has since been waived, but for six months only, up to December 2024, and the damage in terms of investor appetite has already been done,” reads the report.
It added, “Instead of it being reviewed back to the original 1,5 percent, it has been increased to 2 percent—further increasing trading costs.”
Imara said a lot more would have to be done in order to attract a different breed of investors in the country’s capital market, especially at a time when foreign investors are shunning emerging markets.
Further to that, Imara said for the VFEX, depressed valuations look to be the ‘new normal, and in the absence of foreign investors and a competing fixed income arena, it does not foresee any short-term impetus to drive the prices, solid fundamentals notwithstanding.
“As a result, tactically, we are still focusing on less volatile returns to be delivered by a carefully selected portfolio of fixed-income instruments.
With the risk of currency changes quite high, we are actively managing that segment and keeping our tenures at less than one year,” the asset management firm said.
However, at a time National Foods is contemplating moving away from VFEX, there is a pipeline companies in the process of moving their shares to trade on VFEX.
These include Bridgefort and Tanganda Tea Company. Justin Bgoni, the VFEX chief executive earlier in the year, said the bourse continues to attract listings from both domestic and foreign companies and is targeting more than six new listings by the end of this year.
Bongani Ndlovu