BUSINESS REPORTER
The Zimbabwe Stock Exchange (ZSE) will deploy a market surveillance system next month as it seeks to enhance market integrity and safeguard the interest of investors.
The new system will also monitor illicit trade practices on the volatile local bourse.
Zimbabwe will join several other countries in Africa that have deployed such a system. These include South Africa, Nigeria, Kenya, Zambia, Mauritius and Uganda.
“…We will be launching the Securities Trading and Technologies surveillance system beginning of March 2023 in response to the requirements of Statutory Instrument 103A of 2022,” ZSE chief executive officer Justin Bgoni said.
The development comes at a time when ZSE has been subject to manipulation through speculative trading that drove inflation upward and exchange rate volatility.
There have been serious malpractices at the ZSE believed to be part of activities that fuelled parallel market activities.
The deficiencies in the ZSE system allowed clients to sell shares and transfer proceeds to third parties for speculative trading in forex.
Consequently, the government, through SI 103A, gazetted new regulations to operationalise its directive for tighter conditions on trading of securities on ZSE.
Blame has also been placed on the doorsteps of brokers, who have been accused of initiating part of the illegal and speculative activities that fueled depreciation of the Zimbabwe dollar through the transfer of funds between brokers’ sub accounts.
These have since been outlawed by the government, clipping the wings of rogue brokers.
Government also doubled capital gains tax on shares for 270 days or less to 40% from 20%, a move meant to promote long-term investment on the ZSE.
The 20% tax level was seen as not deterrent enough to discourage speculative trading in shares.
The speculators used the price bubble on the ZSE to make huge profits as the bulls kept charging at the local bourse, resulting in the market capitalisation rising to a record ZWL$3.6 trillion in April last year year, from ZWL$1.3 trillion in January.
The total value of stocks, however, plummeted to about ZWL$1.691 trillion in December 2022 after the government’s intervention.
However, this week, the market capitalisation has breached the ZWL$3 trillion mark.
The bullish sentiment also resulted in a brutal attack on the Zimbabwe dollar in both the formal and the parallel market.
