Africa-Press – Eswatini. The Eswatini Stock Exchange dematerialisation process has hit an obstacle, leaving nearly 200 FNB clients in limbo due to technical glitches and onboarding issues.
According to the Eswatini Stock Exchange (ESE) Head, Joyce Dlamini, the delay stems from incomplete integration of FNB onto the Central Securities Depository (CSD) system, the backbone of the dematerialisation project.
She defined dematerialisation as the conversion of physical share certificates into electronic records, saying it was heralded as a major step towards modernising Eswatini’s capital markets.
Dlamini highlighted that dematerialisation promised investors increased efficiency, transparency, and security for their holdings.
benefits
However, for FNB clients who had invested in NPC shares, the benefits remain teasingly out of reach. This follows the ESE having listed 50 million NPC ordinary shares at 100 cents each in September 2023.
Despite capital market challenges, over 450 individual investors subscribed to E25 million of the E50 million offered by NPC to the public at initial public offering (IPO) stage.
In addition, upon commencement of trading, NPC hiked ESE market capitalisation by 4.2 per cent to E4.4 billion.
“NPC was listed after the Legal Notice No. 269 of 2022, a mandatory requirement for all security holders to dematerialise and all new securities to be issued in dematerialised form, which is the reason NPC shareholders were not issued share certificates but were issued in a dematerialised form,” she said.
She highlighted that shareholders had to have a Central Securities Depository account in the dematerialised environment, which is where investors security holdings are managed/held.
“Since NPC has a very large number of retail investors and some of the retail investors were using banks that were not licensed as trustee/custodian, which has contributed to delay, but now that FNB has been onboarded we expect that investors will get confirmation on their subscription to NPC shareholding going forward leading to the deadline of the dematerialisation notice on 29 February 2024,” she said.
Dlamini’s explanation points to challenges in onboarding FNB onto the CSD platform.
“The influx of investors dematerialising, and the two new listings have caused a delay in the process of making sure all investors have CSD accounts to hold their securities. With the addition of FNB as a trustee/custodian we hope the lead time will decrease significantly as we get closer to the dematerialisation deadline on 29 February 2024,” Dlamini said.
She added saying FNB was now trained on what was expected of them to onboard investors.
She cited that the listing of NPC had a very large number of retail investors (individual investors), which was good for the trading of the shares and liquidity), and they wanted to use their bank (FNB)
“The delay in the demat process has been as a result of about 200 FNB clients as their dematerialisation process had not been finalised as FNB had not been properly onboarded on the CSD system,” she said.
Dlamini said most account holders of the other banks have been dematerialised with the exception of Swaziland Building Society clients who have been requested to create and provide banking details from banks with custodial licence.
She acknowledged that this might impact the image of both the ESE and NPC.
patient
“But we would like to urge investors to remain patient as we have just onboarded FNB as a trustee/custodian, which would allow those investors that want to use FNB as their Trustee/Custodian to create their CSD accounts,” she said.
She added that Swaziland Building Society clients had been requested to create and provide banking details from banks with a custodial licence.
She underscored that the delay was an eye opener for the ESE as it showed that the dematerialisation exercise had caused an influx of investors and therefore, had caused some delays to some of the clients who had not received their notifications indicating their new holdings in the dematerialised form.
“The influx of investors dematerialising could be attributed to investors not heeding the legal notice on time as it began in August 2022 until 29 February 2024 (18 months),” she said.
Nkonyeni Pre-Cast shares gain 20%
Nkonyeni Pre-Cast (NPC) shares have been very liquid with a share price gain of 20 per cent from the E1.00 listing price to E1.20 currently.
According to Eswatini Stock Exchange (ESE) Head, Joyce Dlamini, NPC’s gain could be attributed to the many individual investors they engaged during the initial public offering.
“The more retail investors there are, the more likely that liquidity will improve going forward,” said Dlamini.
She added that on the contrary; the share price of FNB Eswatini had not changed from the initial listing share price of E14.83 per share since it commenced trading on December 5, 2023.
“This may be attributable to the fact that the current shareholders are institutional investors, who most of the time, carry shares to manage their portfolios rather than for trading.,” said Dlamini, who highlighted that NPC had gained 20 per cent from the initial listing price, making it one of the best performing share prices on the ESE during the fourth Quarter 2023.
She highlighted that the listing of NPC and FNB had increased/attracted new investors.
“In the case of FNB, there were new institutional investors, such as SNAT.
“With NPC listing, a lot of new investors were attracted as seen by the large number of retail investors, some of them had never invested in shares, but they got that chance with NPC,” she said.
Dlamini stated that the ESE expected these listings to positively impact the long-term growth and development of the Eswatini Capital Market.
“Through these listings, investors will be able to have a wide variety of securities to choose from, hence, diversify their investments as these newly listed companies are in different sectors,” he said.
Dlamini also noted that the listings would encourage other companies in Eswatini to list and have Emaswati as shareholders.
“Investors tend to support and gravitate towards companies that they have invested in as co-owners of those companies and this will mean economic growth of these companies and therefore, possibly have a positive impact on the earnings of those companies,” she said.
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