Staff writer
THE Zimbabwe Stock Exchange (ZSE) began using the Global Industry Classification Standard (GICS) in classifying listed counters Thursday as it seeks to offer an efficient investment tool.
Before the new classification, the equities market had four indices, mining index, industrial index, top 10 index and the All share index.
Now, the industrial index been discontinued and redefined according to GICS, while the Top 10 Investable index will account for free float adjustment.
All listed counters have been reclassified according to the GICS framework, meaning seven new sector indices have been introduced.
These are financials, consumer discretionary index, consumer staples, materials, industrials, information communications and technology and real estate.
The bourse will also have new indices as a result of the revamp, including All share index, ZSE Top 10, ZSE Top 15, ZSE Top 25 index, Small Cap index (41-61), Medium Cap index (11-40), Top 10 investable index and ZSE Export and Dual Listed Index.
ZSE chief executive officer, Justin Bgoni, said last year that the adoption of GICS is part of reforms to make the local bourse in line with international trends.
Bgoni said GICS has been selected as a global industry classification standard to reclassify ZSE’s sectors.
The move is part of efforts to enhance transparency in the local market and provide better information to investors both local and international on the performance of local sectors and industries.
Moreso, the new classifications will encourage all investors to analyse and compare investment performances of different sectors at the ZSE with global equity markets.
This means investors will have better assessment of ZSE and the new system will allow more meaningful comparisons with stocks and sectors across international equity markets.
This, according to analysts who spoke to Business Times, will contribute in setting sector-based investment strategies.
“The new indices are expected to provide the market with better tools for performance measurement as well as assist in sector based investment strategies,” Bgoni said.
Last month, the ZSE signed a Memorandum of Understanding with Get Bucks Microfinance Bank Limited as it moves to operational is the coming on board of a secondary bourse for small to medium enterprises.
The local bourse also signed another MoU with Harare Receivable Exchange in December last year for the development of a receivables financing platform which will offer additional products to the market.
