Published by the government of Zimbabwe
9 July 2008
Harare — THE Zimbabwe Stock Exchange plans to reduce the settlement cycle to plus three (T+3) days starting on August 1, to help investors retain the value from their investments.
The current regulation requires the seller to wait seven business days after the sale of shares before he or she can access the proceeds. Chief executive Mr Emmanuel Munyukwi said the T+7 settlement period was of major concern to the exchange because high inflation had resulted in a loss of value. Mr Munyukwi acknowledged the need to evaluate the current trading systems and said the exchange would introduce efficient trading methods "but we are being hampered by a lack of computerisation, which makes clearing and settlement of trades difficult". Presently, cash is losing value regularly in the face of a weaker dollar.
A shorter settlement period would allow investors to re-use cash in their account more quickly and avoid higher re-entry costs. The stock market has been one of the most favoured investment options to hedge against inflation. The industrials index has so far gained 2 467 282 percent since the beginning of the year (based on Monday's prices) setting new highs in the process with a market capitalisation of just over US$2,6 billion.
The minings index has risen 2 787 637 percent on the year. Last year the ZSE committee discussed the possibility of shortening the settlement period to one day over a period of time but at present the exchange does not have the infrastructure to facilitate the transfer of shares and money between buyers and sellers on a daily basis. Elsewhere in other Africa stock exchanges the more common settlement periods are T+5 and T+4. The Botswana Stock Exchange at four days, Ghana Stock Exchange at five while the Johannesburg Stock Exchange is currently five days with plans to reduce it to three.
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