FBC Securities expect more counters to move to VFEX
BUSINESS REPORTER
Securities firm FBC Securities expects more companies currently listed on the Zimbabwe Stock Exchange (ZSE) to migrate to the United States dollar-denominated Victoria Falls Stock Exchange (VFEX).
It comes after hospitality group, African Sun Limited last week moved from the ZSE to list on the VFEX.
Several other counters recently dumped the ZSE and moved to the VFEX. These include Padenga Holdings, National Foods, Simbisa, Innscor Africa Limited and Bindura Nickel.
Several other companies including financial services provider, First Capital Bank, are also planning to dump ZSE and migrate to VFEX.
In its latest report for Q1 2023, published last week, FBC Securities said it expects to see “more migrations to the VFEX as the theme of dollarisation continues locally.
“The VFEX currently has a steady pipeline of new listings. First Capital Bank and African Sun have joined the list of companies slated for VFEX migration. West Properties Company is set to become the VFEX’s first IPO, as all listings on VFEX to date have been migrations from the ZSE,” FBC Securities said.
It said the VFEX remains a viable option for investors with USD liquidity, offering returns and value preservation in a more stable currency than the ZWL.
“The exchange currently hosts a number of quality listings, and has a healthy pipeline of expected listings in the near future. Despite the current liquidity challenges, we anticipate improved activity owing to increased flow of USD in the formal economy and the growing number of listings on the bourse in the medium to long term.”
FBC Securities, however, said the liquidity challenges remained a major drawback, limiting pronounced investor participation.
“Resultantly, the All Share Index has fallen 7% year to date, closing the month of March at 91.76 points .As the number of quality listings on the VFEX continues to grow, and the flow of USD liquidity increases in the formal economy, we anticipate improved activity on the VFEX in the medium to long term,” it said.
FBC Securities said global and local economic outlook remains largely uncertain as a result of high interest rate and inflation dynamics as well as uncertainty around the upcoming elections in Zimbabwe.
“Due to the prevailing uncertainty, it would be prudent for investors to take positions in defensive stocks, with resilient business models and stable dividend policies to hedge against value loss,” it said.
