NDAMU SANDU
Local fund managers are warming up to the foreign currency-only bourse, the Victoria Falls Stock Exchange (VFEX) saying the bourse’s ability to lure them is dependent on its ability to attract new listings.
VFEX will be officially launched tomorrow with trading of securities beginning on Monday.
A subsidiary of the Zimbabwe Stock Exchange (ZSE), VFEX was established to kick start the Offshore Financial Services Centre earmarked for the special economic zone in Victoria Falls.
A fund manager told Business Times that they have the resources from dividends in dual listed counters which can be ploughed on VFEX dependent on the speed at which new listings will come to the market.
“There must be companies that come to raise money on VFEX. The fundamental issue is will the exchange be able to attract new listings?” the fund manager said, adding that there will be scepticism in the initial stages.
The fund manager said scepticism was expected coming after investors were left in a lurch following the one-month closure of the bourse in June to facilitate investigations into alleged illicit deals blamed for the routing of the local unit against major currencies.
Dual-listed counters, particularly Old Mutual, was blamed with authorities saying the Old Mutual Implied Rate– a comparison of the price of shares of insurer Old Mutual in London and Harare—had fuelled the depreciation of the local unit.
The market reopened in August, minus dual listed counters Old Mutual Zimbabwe, PPC and Seed Co International that were ordered to exit ZSE and trade on VFEX.
Another fund manager said they have resources looking for a home.
“There are some resources in the market that are looking for scrip.
Is there going to be appropriate scrip on the market?
On ZSE you have over 50 companies to choose from,” the fund manager said, adding their expectation was that “the dual-listed companies on ZSE are on the starting block provided they want to be listed there”.
But he said the VFEX can lure companies if they can raise international capital.
Seed Co International will become the first issuer to list on the VFEX main board with effect from October 26.
The company’s listing on ZSE will be terminated with effect from tomorrow.
There were fears that companies will leave ZSE en masse for the foreign currency only bourse.
Authorities have put enough safeguards to avoid the cannibalism of ZSE by prescribing that companies listed on ZSE can list 20% of their share capital on VFEX.
An investment analyst told Business Times the Zimbabwean dollar board may continue to be a success as it has quality companies.
“ZSE will remain your primary exchange with VFEX being the secondary exchange.
I don’t think it is the right time to write off ZSE.
The 20% limit protects the bourse,” the analyst said.
VFEX debuts with 17 securities dealers, 13 sponsors, five securities custodians, three securities transfer secretaries and seven non-member institutions.
