FBC Securities has expressed optimism that more companies will list on the US$ denominated Victoria Falls Exchange (VFEX) due to the stock market's stability in the face of policy changes.
The VFEX, a subsidiary of the Zimbabwe Stock Exchange (ZSE) was established in 2020 to kick start the Offshore Financial Services Centre (OFSC).
Its trading currency is in US$ as such, dividends will be paid out in foreign currency or any other convertible currency.
Presenting the economic outlook for 2023, stockbroker FBC Securities said there has been a notable increase in interest in the VFEX, both from an issuer and investor perspective at a time when the local currency denominated ZSE has faced challenges in the year 2022.
The stockbroker said challenges include high transaction costs and acute regulation.
"The VFEX has remained largely stable as it has not been susceptible to abrupt policy changes and currency volatility. Its launch was part of efforts to attract global capital, restore foreign investor confidence in Zimbabwe's capital markets and assist companies raise foreign currency capital.
"The bourse has experienced rapid growth in recent months and apart from attendant value opportunities, policy arbitrage has also been pivotal in attracting migrations," said FBC.
The VFEX platform offers a number of incentives, including tax exemptions on capital gains and the ability to repatriate funds which has been a challenge in previous years. Investors benefit from the ability to move capital and dividends freely, low transaction costs, tax incentives and minimal currency risks.
Activity on the bourse increased notably in 2022. This was a function of more listings on the bourse and increased foreign currency liquidity in the formal market, available for trading purposes.
Turnover volumes advanced 1,500% year to 31 December 2022,while turnover volumes grew 1,702% from US$25,736 to US$463,855. Market capitalization increased 118% over the year from US$259,7mln to US$566 mln.
By the end of the year 2022, there were eight counters trading on the bourse, with a handful of pipeline migrations from the ZSE platform.
The bourse hosts Padenga Holdings Limited, Caledonia Mining, Bindura Nickel Corporation, Simbisa Brands,Nedbank ZDR's, Seedco International, National Foods and the Karo Bond.
"As more companies' foreign currency generation improves, especially those involved in consumer staples, tourism and hospitality, agricultural exporting and mining companies, we anticipate more listings on the VFEX in the current year (2023).
"Axia Corporation and Seedco Limited are among the companies that have expressed interest in migrating to the VFEX early this year," added FBC Securities.