malvernmugadzikwa
Nelson Gahadza
ACTIVITY on the Victoria Falls Stock Exchange (VFEX) has remained subdued, with several new listings in the new year expected to reinvigorate trading and liquidity, experts have said.
VFEX, a United States dollar-denominated stock exchange, has since its inception in October 2020, seen listings from various sectors such as mining, financial services, tourism, hospitality and clothing, with several entities having migrated from the Zimbabwe Stock Exchange (ZSE), which trades in the local currency.
While the US dollar-denominated exchange has been characterised by low trading activity, experts believe the continued on-boarding of new counters and investment products by the bourse will improve performance.
In an interview, Mr Gift Chawasarira, finance director at VFEX prospective issuer Diaspora Kapita (DK), said liquidity is a function of the products offered, and VFEX has been developing investment platforms such as the commodities and bond markets.
“If you put exciting products, the market will accept them, and people have the money to invest. As DK, we are bringing innovative products that will attract people to come together to invest, and I believe there is quite a lot of money based there in the pension funds,” he said.
DK is the latest company to have shown interest in listing on VFEX once the acquisition transaction by Bridgefort Capital is concluded.
Established in 2014 in South Africa, DK is a collaborative venture between Zimbabweans living in the diaspora and their counterparts in Zimbabwe. The group provides a range of services and investment opportunities tailored for the diaspora community.
These include comprehensive funeral services, which cover funeral arrangements, burials in South Africa and repatriations to Zimbabwe, diaspora-targeted investments and alternative investment solutions.
Mr Chawasarira said the transaction, which has since received shareholder approval, is now awaiting exchange control approvals from both the Reserve Bank of Zimbabwe (RBZ) and the South African Reserve Bank, and hopes to have listed on the bourse before year-end.
VFEX, in its third quarter 2024 newsletter, said it has on-boarded its 16th listing on the bourse, the Invictus Energy Depository Receipts, which listed on August 2, 2024.
Retailer Edgars Stores also migrated its listing from the ZSE in the third quarter of 2024 and, additionally, VFEX launched contracts for differences (CFDs).
The bourse is also in the process of launching the commodities exchange after the rules governing its operations were gazetted.
Equities research and stockbroking firm IH Securities said the pipeline of companies migrating to the VFEX remained steady, with the bourse aiming to secure four additional listings by the end of the year. The most recent announcement of intent to list came from mineral exploration company Kavango Resources.
In its year to date growth strategy report, IH said, whilst liquidity on the bourse had been an area of concern since inception, year to date average daily value traded to October 28, 2024 had increased by 84 percent to US$0,16 million from US$0,09 million in the comparable period.
It said the commodities exchange was expected to boost market liquidity, in addition to diversifying investment options.
Mr Justin Bgoni, the VFEX chief executive, earlier in the year said the bourse continued to attract listings from both domestic and foreign companies, and is targeting more than six new listings by the end of this year.
Mr Batanai Matsika, an investment analyst, said VFEX could have been better, but because of liquidity issues, there was limited trading.
He said, in terms of capital raising, it had served its purpose.
“Businesses indexed in USD still have an appetite to go there, and I think they have not moved because they are still assessing the liquidity issues on how they will evolve. It’s about timing, but every business would want to trade in USD,” he said.
Tanganda Tea Company Limited is also aiming to list on VFEX while planning to raise US$7,7 million through a renounceable rights offer.
Bongani Ndlovu
Online Reporter