Retail investors drive surge in stocks

November 25, 2021

LIVINGSTONE MARUFU

 

Total individual investors on the Zimbabwe Stock Exchange (ZSE)  surged 458% to 8435 in the 12 months to October this year following the introduction of exchange traded  funds (ETFs) and the new channels, Business Times can report.

The trades  stood at 1 512 in October last year.

The surge in  stock buying by retail investors helped a relentless rally  in equities at the local bourse  in the period under review, prompting a spike in the value of stocks to ZWL$1.4tn on Monday this week  from ZWL$713m in December last year.

ZSE CEO, Justin Bgoni, said the introduction of the ZSE direct boosted the retail investors’ trades.

“The addition of the (Old Mutual Top 10 ) ETF to the market has resulted in increased participation, especially from retail investors.

“The increase in retail participation can also be attributed to the addition of channels like ZSE Direct which has assisted retail investors with easier access to the stock market,” Bgoni told Business Times.

He said the proceeds from a sell order on ZSE Direct will now be credited to the investor’s wallet rather than being transferred to their bank account as it moves to drive participation of individuals on the bourse.

The service attracts a 2% administrative charge levied on the sale praoceeds.

Bgoni said a client does not have to wait for the settlement cycle of T+3 to receive your sell proceeds, an added convenience brought to the retail investor by ZSE.

He said the retail investor could reinvest the proceeds easier and much faster and the measure eliminates additional charges associated with movement of funds from one bank to the other.

Bgoni said the bourse would continue to explore initiatives that promote financial inclusion and increase retail participation.

The exchange has been introducing new products to drive participation on ZSE.

In January this year, the Old Mutual  Top 10 Exchange Traded Funds listed on the bourse.

It tracks the performance of ZSE’s top 10 counters by market capitalisation. The top 10 counters are reviewed every quarter.

The 10 constituents for the third quarter are CBZ Holdings, Cassava Smartech Zimbabwe, Delta Corporation, Econet Wireless Zimbabwe, FBC Holdings, Hippo Valley Estates, Innscor Africa, National Foods Holdings, OK Zimbabwe and Simbisa Brands Limited.

The value of the Old Mutual Zimbabwe Stock Exchange Top 10 Index ETF gained nearly 800% on the back of increased participation by retail investors.

On its debut, the ETF had a market capitalisation of ZWL$80.176m.

The market capitalisation was ZWL$733m on Monday this week.

The price of the ETF also gained to ZWL$5 on Monday this week from the opening listing price of ZWL$1, on January 4, 2021.

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