malvernmugadzikwa
Business Reporter
THE Victoria Falls Stock Exchange (VFEX) intends to unveil new products, including a commodities exchange, during the second half of the year, it has been learnt.
This is part of a broader initiative to deepen the country’s capital markets and transform the resort town into an offshore financial services centre, which will boost investment opportunities.
“We are looking at introducing a commodities exchange during the second half of 2023, which we are excited about,” said the Zimbabwe Stock Exchange (ZSE) head of markets, Mr Kudakwashe Mundowozi, during a VFEX Diaspora Masterclass.
In 2021, the VFEX signed a memorandum of understanding (MoU) with the Dubai Gold and Commodities Exchange (DGCX). The MoU provides for the extension of technical support from DGCX to VFEX, with the ultimate aim of establishing an international commodities exchange in Zimbabwe.
A workshop was subsequently held to allow key stakeholders to learn from the DGCX experience and exchange ideas on the establishment of a local commodities exchange.
The DGCX is key as it is a leading derivatives exchange in the Middle East and has played a pioneering role in developing the regional market for derivatives trading, clearing and settlement.
Trading of commodities is ranked number three after foreign exchange and bonds, in terms of value traded, creating scope for Zimbabwe to further diversify shares trading into commodities and bonds trading.
A commodities exchange could lead to increased economic activity through job creation and expansion of the mining sector.
“Work on this has already started and we should see it through the close of this calendar year,” said Mr Mundowozi.
Experts in the capital markets and mining sector believe the exchange is a potential game changer, especially for a country endowed with vast mineral resources. However, the commodities exchange is just one of the products VFEX plans to introduce.
According to Mr Mundowozi, another listing is expected before year-end, while an exchange traded fund (ETF), debt instruments and real estate investment trust (REIT) will debut on the US dollar-denominated exchange.
“We should see these coming through in the second half of the year,” he said.
The US dollar-denominated exchange was launched in 2020 to allow companies to raise capital in foreign currency for their expansion projects, as well as import raw materials and equipment.
It was introduced to address some of the challenges businesses and investors faced on the ZSE. Trading commenced on October 26, 2020, with Seed Co International as the pioneering counter, followed by diversified crocodile breeder Padenga the following year.
The exchange now has 13 listings.
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