Business / Companies
ZSE rankings improve in Africa
30 Jul 2013 at 04:23hrs | Views
TRADING on the Zimbabwe Stock Exchange has registered phenomenal growth between May and June this year resulting in the bourse improving rankings on the continent, Finance Minister Tendai Biti has said.
Presenting the 2013 mid-term budget last week, he said although trading at the ZSE was subdued in the first quarter, development in May and June had defied all fundamentals as the industrial index and market capitalisation registered phenomenal growth.
"This has resulted in the local bourse being ranked fourth in Africa in terms of weekly turnover, after Nigeria and Nairobi Stock Exchanges and third by year to date return, after Ghana and Uganda as at 31 May 2013. Notwithstanding this sterling performance, activity is below that of 2012 and is mainly confined to a few solid counters.
Foreigners continue to dominate, with average market participation of 61 percent on the buy side. On the other hand, local investors are mainly net sellers due to low disposable incomes and savings," he said.
The industrial index registered a 38,6 percent growth from 152,4 as at 1 January to 223,58 as at 28 June 2013 while the mining index increased by 11,2 percent from 65,12 to 70,42 over the same period.
Market capitalisation, which was $3.96 billion during the beginning of the year, breached the $5 billion mark in May and closed at $5.3 billion on 28 June 2013.
Although the above figures show positive growth, the ZSE continues to have challenges that include minimal corporate actions, absence of new listings and many struggling companies.
Minister Biti said some of the listed companies were struggling due to lack of working capital and inability to meet continuing obligations of listed companies.
"As a result of these challenges, about 20 percent of the listed companies on the ZSE remain inactive. Some of the inactive companies have applied for voluntary de-listings, while others have been forced to de-list as they cannot meet the minimum requirements for listed companies. This explains the increase in de-listings of a number of counters by the ZSE as communicated through the media.
The exercise should result in more active counters of quality on the exchange," he said.
Turning to development of the securities market, Minister Biti said: "In an environment where markets have become extremely competitive due to financial globalism, Zimbabwe needs to move with the times in order to attract a significant amount of possible foreign portfolio investments.
In view of this, effort is being directed at ensuring that there is price discovery in the market, good corporate governance, enabling infrastructure and strengthened regulatory and supervisory framework."
Some of the measures being undertaken to strengthen the securities market include the setting up of Central Securities Depository (CSD), automation as well as demutualisation of the stock exchange.
"In line with the vision of modernising our capital markets infrastructure, notable progress has been registered in the establishment of the Central Securities Depository. The CSD implementing company, Chengetedzai Depository Company, has set up a data centre and installed hardware. The system is expected to go live in September 2013, having missed the first quarter target date alluded to in the 2013 national budget statement."
Automation and demutualisation of the stock exchange were some of the critical projects in the securities market.
Recently, the ZSE chief executive officer Mr Alban Chirume said they had short-listed five candidates (firms and individuals) that expressed interest in the bourse's Automated Trading System (ATS) consultancy position.
The five candidates are drawn from Africa, Europe and Asia.
Mr Chirume said the ZSE was at a crucial stage of selecting the automated trading system consultancy to assist in coming up with a road map for the implementation stage.
The desired consultancy among others, is supposed to assist the ZSE in the selection and tendering process of a suitable automated trading system vendor as well as developing methodologies, strategies and procedures for successful implementation of the ATS.
Stakeholder consensus on the ZSE demutualisation has also been reached following the approval of the Securities Amendment Bill into law, making it a statutory requirement for all securities exchanges to be corporate bodies.
The stock exchange is expected to be demutualised by end of the first quarter of next year.
Presenting the 2013 mid-term budget last week, he said although trading at the ZSE was subdued in the first quarter, development in May and June had defied all fundamentals as the industrial index and market capitalisation registered phenomenal growth.
"This has resulted in the local bourse being ranked fourth in Africa in terms of weekly turnover, after Nigeria and Nairobi Stock Exchanges and third by year to date return, after Ghana and Uganda as at 31 May 2013. Notwithstanding this sterling performance, activity is below that of 2012 and is mainly confined to a few solid counters.
Foreigners continue to dominate, with average market participation of 61 percent on the buy side. On the other hand, local investors are mainly net sellers due to low disposable incomes and savings," he said.
The industrial index registered a 38,6 percent growth from 152,4 as at 1 January to 223,58 as at 28 June 2013 while the mining index increased by 11,2 percent from 65,12 to 70,42 over the same period.
Market capitalisation, which was $3.96 billion during the beginning of the year, breached the $5 billion mark in May and closed at $5.3 billion on 28 June 2013.
Although the above figures show positive growth, the ZSE continues to have challenges that include minimal corporate actions, absence of new listings and many struggling companies.
Minister Biti said some of the listed companies were struggling due to lack of working capital and inability to meet continuing obligations of listed companies.
"As a result of these challenges, about 20 percent of the listed companies on the ZSE remain inactive. Some of the inactive companies have applied for voluntary de-listings, while others have been forced to de-list as they cannot meet the minimum requirements for listed companies. This explains the increase in de-listings of a number of counters by the ZSE as communicated through the media.
The exercise should result in more active counters of quality on the exchange," he said.
Turning to development of the securities market, Minister Biti said: "In an environment where markets have become extremely competitive due to financial globalism, Zimbabwe needs to move with the times in order to attract a significant amount of possible foreign portfolio investments.
In view of this, effort is being directed at ensuring that there is price discovery in the market, good corporate governance, enabling infrastructure and strengthened regulatory and supervisory framework."
Some of the measures being undertaken to strengthen the securities market include the setting up of Central Securities Depository (CSD), automation as well as demutualisation of the stock exchange.
"In line with the vision of modernising our capital markets infrastructure, notable progress has been registered in the establishment of the Central Securities Depository. The CSD implementing company, Chengetedzai Depository Company, has set up a data centre and installed hardware. The system is expected to go live in September 2013, having missed the first quarter target date alluded to in the 2013 national budget statement."
Automation and demutualisation of the stock exchange were some of the critical projects in the securities market.
Recently, the ZSE chief executive officer Mr Alban Chirume said they had short-listed five candidates (firms and individuals) that expressed interest in the bourse's Automated Trading System (ATS) consultancy position.
The five candidates are drawn from Africa, Europe and Asia.
Mr Chirume said the ZSE was at a crucial stage of selecting the automated trading system consultancy to assist in coming up with a road map for the implementation stage.
The desired consultancy among others, is supposed to assist the ZSE in the selection and tendering process of a suitable automated trading system vendor as well as developing methodologies, strategies and procedures for successful implementation of the ATS.
Stakeholder consensus on the ZSE demutualisation has also been reached following the approval of the Securities Amendment Bill into law, making it a statutory requirement for all securities exchanges to be corporate bodies.
The stock exchange is expected to be demutualised by end of the first quarter of next year.
Source - chronicle
