Markets

ZSE in retrospect

NDAMU SANDU

In the Christian community, 2020 was billed to be the year
of open doors, breakthroughs or take off.

The year turned out to be different due to the outbreak of the Covid-19 pandemic which spawned global lockdown.

For the innovative companies, the open doors and breakthroughs came
after they seized the opportunity.

MTHULI STRIKES ON IDES OF MARCH

Roman general and statesman Julius Caesar was assassinated on
March 15 in 44 BC.

The day has normally been associated with bad things.

Finance minister Mthuli Ncube became a bearer of bad news
when he suspended the fungibility for a year of shares of Old Mutual,
PPC and Seed Co International on March 15.

The extraordinary gazette announcing the suspension came out on a Sunday!

MEIKLES CHECKS OUT OF FLAGSHIP HOTEL

In March, Meikles Limited checked out of the iconic Meikles Hotel
after the US$20m sale of the unit to Dubai-based Albwardy Investments
was approved by shareholders.

The deal was also ratified by the Competition and Tariff Commission
as well as exchange control authorities in Zimbabwe.

ZSE SUSPENSION

On June 26, the government announced the suspension of transactions on phone-based mobile money platforms and suspended trading on ZSE as part of a series of “prudent and coordinated interventions to deal
with malpractices, criminality and economic sabotage” amid allegations
the platforms were fuelling the rout of the local currency.

Government spokesperson Nick Mangwana alleged there were “fake counters” on ZSE which are epitomised by the Old Mutual Implied Exchange rate (OMIR).

OMIR is a comparison of the price of shares of insurer Old Mutual in
London and Harare.

The suspension was lifted in August and trading on ZSE resumed minus three fungible counters—Old Mutual, PPC and Seed Co International—with the authorities urging the trio to trade on the foreign currency only bourse.

…and VFEX was born

The foreign currency bourse debuted in October with one counter, Seed
Co International.

It is expected that Old Mutual Zimbabwe and PPC
would join the bourse after being told to exit the Zimbabwe dollar
board.
VFEX’s parent, ZSE, is working round to clock to lure new listings on the bourse.

NEW INDICES

ZSE adopted the Global Industry Classification Standards which saw
the reclassified of counters with effect from January 1.

The reclassification resulted in the creation of six indices—ZSE top 10, ZSE Top 15, ZSE Top 25, Small Cap Index, Medium Cap Index, All Share Index.

The reclassification introduced sector indices—ZSE Financials Index,
ZSE Consumer Discretionary Index, ZSE Consumers Staples Index, ZSE
Industrials Index, ZSE Information, Communication and Technology
Index, ZSE Materials Index and the ZSE Real Estate Index.

ETFS BOOST

Early this year, the Securities and Exchange Commission of Zimbabwe approved the Securities and Exchange (Zimbabwe Stock
Exchange Listings Requirements) (Amendment) rules, 2019 and the
Securities and Exchange (Zimbabwe Stock Exchange Market Making)
rules 2019 which will see the bourse able to receive applications for
listing of Exchange Trade Funds (ETF).

Spurred on by that enabling regulation, Old Mutual Zimbabwe will list on ZSE, Zimbabwe’s first EFT on January 4.

The Old Mutual Zimbabwe Top 10 Exchange Traded
Fund by way of introduction making Zimbabwe one of the five countries
to trade the instrument in Africa after South Africa, Nigeria, Kenya
and Egypt.
Old Mutual Securities was in April registered as the first market maker for an ETF.

ZSE LIFTS HIPPO’S SUSPENSION
In February, the bourse lifted the suspension in the trading of Hippo
shares.

The sugar producer was voluntarily suspended from trading
in August 2019 pending finalisation of investigations at Tongaat Hulett
Limited, the parent company of HIPPO and publication of FY19
financial results.

COVID-19 EFFECTS

Companies had to reconfigure as they adjusted to the new normal
of working from home.

There were some casualties too.

For shareholders, companies had to forgo dividend
as they build reserves for a tough outlook.

For the first time, AGMs were held virtually as companies adhere to guidelines of meetings of at most 50.

RETURN OF THE AUCTION SYSTEM

In June, the foreign currency auction system was introduced to replace the fixed exchange rate that was in place and was unworkable.

An auction system for SMEs began in August.

Listed firms say the auction has been critical in allocating foreign currency.

In addition, the auction allocates weekly resources for dividends and
disinvestments.

Foreign shareholders on ZSE have been struggling to repatriate their dividends.

REBUNDLING

Insurance encyclopaedia Albert Nduna believes that it was the duty
of executives to unlock shareholder value.

His 31 years stint at Zimre Holdings Limited (ZHL) saw the group demerging NicozDiamond, Fidelity Life and Zimre Property Investments which listed on the Zimbabwe Stock Exchange.

Four years after Nduna left ZHL, the company is rebundling with Fidelity Life and ZPI becoming units of the group. This has seen Fidelity and ZPI exiting the ZSE.

In 2003, African Sun and Dawn were demerged and listed separately to create shareholder value.

But the shareholders felt the intended objective had not been met.

ASL said the full integration of the business, expected to be achieved within two years, would enhance its earnings per share and gives the group full control of the freehold title of the seven hotels it leased from Dawn.

JOINT FORCES ON RECIEVABLES FINANCING

ZSE and the Harare Receivable Exchange teamed up to launch the Zimbabwe Receivables Market Place (ZRM) as a platform to offer
working capital solutions through receivables discounting and trading.

Under the platform, invoices can be used as collateral thereby rescuing
SMEs that have struggled to raise funding due to the absence of
collateral. As of last month, ZRM had an order book of ZWL$22.5m.

It said 32 SMEs had registered and eight corporates were in the process
of finalising registration.

ASA FINALLY EXITS BNC

In September, ASA Resources has completed its exit from Bindura
Nickel Corporation (BNC) after selling a block of shares to Kuvimba
Mining House (Private) Limited in a transaction valued at ZWL$3 486
344 584.17.

NSSA DIVESTS FROM ZB

Early this month, the National Social Security Authority disposed of
its 37.79% ZB Financial Holdings (ZBFH) shareholding in a share
swap which saw the authority getting CBZ shares worth ZW$640m.

As part of the transaction, NSSA also received US$11,646,889 after
factoring transaction costs.

ZSE TARGETS RETAIL INVESTORS

In September, ZSE launched ZSE Direct, a new platform that targets
individual amid low participation by individuals on ZSE and the
perception that investment is for the sophisticated.

The minimum investment is ZWL$500 and the platform has features such as buying, selling and checking an investor’s balance.

MOVERS & SHAKERS

Turnall appointed Zvidzayi Bikwa as its new MD with effect from
December 1, 2020.

He replaced Roseline Chisveto who left the company at the end of August.
Precious Nyika took over the reins at Lafarge Zimbabwe with effect from
March, succeeding Siame Kaulule who assumed another post at Lafarge
South Africa.
Samuel Matsekete began his stint as Old Mutual Zimbabwe CEO from January 1.

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