Africa-Press – Zimbabwe. THE Zimbabwe Stock Exchange Holdings (ZSEH) has begun international roadshows to woo foreign investors back to local capital markets, after participation plunged 50% in the past five years, according to estimates.
According to the Securities and Exchange Commission of Zimbabwe (SecZim), overall participation on the ZSE and Victoria Falls Stock Exchange (VFEX) during the first quarter was 15,4% and 3,32%, respectively.
ZSE market capitalisation for the second quarter stood at ZiG62,64 billion (US$2,33 billion), a decrease of 3,08% from the previous quarter.
The total market capitalisation of the VFEX as at June 30 stood at US$1,25 billion.
Data from SecZim shows that foreign investor participation once peaked at 50%.
The low foreign investor participation is attributed to exchange rate volatility and struggles in repatriating dividends.
“We’ve been having roadshows. We’ve been to South Africa, the UK (United Kingdom), our traditional markets… And I explained that they can come back to invest. So that’s what we’re doing. We are doing investment shows,” ZSEH chief executive officer Justin Bgoni told NewsDay Business in response to what the firm was doing to lure foreign investors on the bourses.
“But the problem is that once trust is broken, it takes a little bit more time for people to trust you. So, we know they will try to bring us what amount of money, but without you knowing, they will see if they can take it out. Hence, we monitor what’s going on.”
He said ZSEH was, however, happy with the VFEX in terms of investment.
“There has been some foreign investment there that we are sure about, and we are comfortable that on the VFEX side, there is much more foreign investment. Around ZSE, I think they just see how stable the ZiG is,” Bgoni said.
He said this was why local institutional investors needed to step up, but that it need not be too concentrated.
“It has been the asset managers and foreign investors. The one that l am worried about is the foreign investors,” Bgoni said.
“What we like about the foreign investors is when the market has got a lot of value, that’s where they normally come in and they drive the asset price; they are the ones we are worried about.”
He said asset managers’ exposure to the capital markets was as high as 70% which was too high. This number presented a concentration risk, Bgoni said, adding that ZSEH expects that number to come down.
“And as I said, for us, it means now we have a more diverse share, diverse investment, because if you go to one class of investors owning 70%, you’re in trouble because if that class has a problem, then your market suffers. Hence, we’re happy now there’s more diversity,” he said.
Bgoni noted that property portfolios continue to dominate interest amid the economic volatility.
“In Zimbabwe, when people are uncertain, they prefer property. The way we want to expose them to property is through REITs [real estate investment trusts],” he said.
For More News And Analysis About Zimbabwe Follow Africa-Press
