PHILLIMON MHLANGA
Foreign investors have pulled out a record ZWL$1.586bn from the Zimbabwe Stock Exchange (ZSE) in one week amid mounting concerns over unsettling policies as well as to reduce their exposure in companies not migrating to the Victoria Falls Stock Exchange (VFEX).
Multiple investment experts told Business Times yesterday that another reason for the severe sell off from ZSE, which has been a go-to destination for those seeking to raise cheap funding, has also been largely the failure to repatriate proceeds and dividends to countries of their origins and taking advantage of the VFEX.
The experts said the sell off was the kind that has not been seen before.
They said the foreign investors have been reducing their exposure to companies not migrating to VFEX.
“What has been happening between January to date is that there has been a massive foreign sell off whereby foreigners have been reducing their exposure in companies which are not yet migrating to VFEX,” an investment expert who requested anonymity told Business Times yesterday.
He added: “So, it has been basically a switch, which has been happening between Delta, Econet, Hippo Valley to companies migrating to VFEX.
“These foreigners are trying to find a way to exit the market (ZSE). So, what was the best way of doing that?
“They have been trying to find solace in companies which have been migrating to VFEX, no wonder why we have seen this hype.
“So, these are predominately switches where you move from for example Delta and go to Innscor Africa knowing that Innscor is going to migrate to VFEX.
And the cause of that migration is ease of repatriation of dividends at VFEX as opposed to what happens at ZSE.
So, this has been a predominant fact.
“And who has been buying what these foreign sellers have been offering? We have seen entry of new players. We have picked some new names, not necessarily your historical asset managers like Old Mutual, Datvest, FBC or pension funds.
These have been predominantly new players that have been taking positions.
And these have been getting RTGS.
And because of the tight monitoring especially from the Financial Intelligence Unit, in terms of activity on the alternative market, we have seen certain players now opting for the stock market as a safer haven or a safer investment alternative.”
In the absence of foreign investors, who had been carrying the market, the local bourse has been drifting lower in terms of ZSE trade.
