Securities firm tips quality stock to boost VFEX liquidity
BUSINESS REPORTER
Securities firm, FBC Securities, says the listing of quality stock on the Victoria Falls Stock Exchange (VFEX) will boost activity and improve liquidity on the foreign currency-only bourse.
This comes as the bourse has been experiencing low activity levels thereby affecting liquidity.
“The increasing number of quality stocks listing on the VFEX will aid in boosting activity and improving liquidity. Increased flow of foreign currency within the formal economy will also be key to driving activity on the VFEX with some of these funds directed to the stock market,” FBC Securities said.
There has been a migration of companies from the Zimbabwe Stock Exchange (ZSE), buoyed by incentives such as tax exemptions on capital gains and the ability to repatriate funds.
Some companies that have migrated to the VFEX include Innscor Africa, Simbisa Brands, Axia Corporation and Padenga Holdings.
GetBucks Microfinance Bank and Africa Sun Limited have announced plans to join the foreign currency only bourse.
FBC Securities, however, cautioned that the migration of quality stocks to the VFEX as opposed to new listings may be detrimental to the viability of the local currency denominated bourse.
It said the number of listings on the VFEX is expected to continue to grow this year as a result of existing local currency dynamics and unpopular policy intervention on the ZSE.
In its latest report, FBC Securities named Innscor Africa and Simbisa Brands as VFEX top picks.
It said Innscor was well positioned to navigate challenges presented by an uncertain global outlook and complexities in the local environment due in part to its diversified product offering.
Additionally, the business operates in the consumer staples sector, therefore, demand for its products is largely sustainable even in times of economic downturn, FBC Securities said.
It projects envisaged growth in key economic sectors such as mining, agriculture and construction industries to translate to improved consumer disposable income which will drive Simbisa’s growth.
