The institutional buy-and-hold lockup
TARISAI MAKUNI
Zimbabwe’s capital markets continue to grapple with a persistent structural paradox, with secondary market trading volumes remaining chronically subdued, punctuated only by occasional block trades and concentrated activity in a handful of heavyweight counters.
On the ZSE, activity has been anchored almost entirely by Delta Corporation over recent weeks, with Tigere REIT providing similar baseline support in the listed property space. Exchange-Traded Funds (ETFs), on the other hand, suffer from illiquidity, often closing sessions without a single trade executed.
Notwithstanding tight macroeconomic ZiG liquidity containment, underlying buy-side demand persists, yet secondary trading is restricted by a lack of sell-side supply as institutional investors lock up units in long-term hold portfolios.
At the centre of this liquidity bottleneck lies an institutional buy-and-hold lockup. Driven by systemic currency volatility and a scarcity of investable assets, institutional asset managers and pension funds have adopted strictly defensive allocation strategies.
Rather than actively trading securities on the secondary market, institutional capital locks tier-one equity counters, listed Real Estate Investment Trusts (REITs), and Exchange-Traded Funds (ETFs) into static, long-term portfolios.
On the Zimbabwe Stock Exchange (ZSE), this buy-and-hold posture represents one of the most significant structural constraints on market efficiency. While a long-term holding strategy in mature markets typically signals investor confidence, on the ZSE it is primarily a mechanism for risk mitigation, portfolio preservation, and asset-class hedging.
In an economic landscape defined by currency adjustments and inflation risk, quality equities and listed property instruments serve as primary store-of-value hedges.
Institutional investors, primarily pension funds, life assurers, and asset managers—control the vast majority of circulating scrip on the ZSE.
Once a manager secures a meaningful position in cash-generative blue chips or high-occupancy income REITs, selling creates reinvestment risk.
With limited alternative liquid instruments available in ZiG, converting securities into cash exposes funds to real-value erosion if proceeds cannot be immediately redeployed.
Consequently, millions of shares remain sterilized in institutional vaults, shrinking the ZSE’s active floating supply.
This structural illiquidity creates wide bid-ask spreads, allowing even modest order flows to trigger disproportionate price swings.
More critically, price discovery becomes impaired, reflecting supply-demand imbalances and liquidity squeezes rather than underlying corporate fundamentals. This effect is further magnified when market-moving news, such as migrations to the Victoria Falls Stock Exchange (VFEX), strategic acquisitions, or corporate restructurings, drives price action independent of financial performance. Meanwhile, retail investors face complete execution barriers due to thin sell-side order depth, further dampening overall daily market turnover.
This institutional lockup underscores why expanding securitized property vehicles, such as REITs, and broadening exposure to ETFs are critical for Zimbabwe’s capital market evolution.
By expanding the universe of yield-bearing assets, securitization creates alternative liquidity channels.
Pension funds can trade REIT units to satisfy short-term payout obligations without resorting to the market-disruptive dumping of core blue-chip equities.
Reviving market velocity requires designated market makers for REITs and ETFs to provide continuous order-book liquidity. Although, market-making alone cannot fix asset scarcity or currency risk.
