ZSE plans to introduce exchange-traded fund

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Munashe Matambo and Kudakwashe Mhundwa
The Zimbabwe Stock Exchange says it is looking at introducing Exchange-Traded Funds (ETFs) in the near future, as a way of boosting activity on the local bourse. An ETF, or exchange-traded fund, is a marketable security that tracks an index or a basket of assets like an index fund.

Unlike mutual funds, an ETF trades like a common stock on a stock exchange and experiences price changes as they are bought and sold. ETFs typically have higher daily liquidity and lower fees than mutual fund shares, making them an attractive alternative for individual investors.

The ZSE recently introduced two new indices which some market players see as a precursor to the introduction ETFs.

In response to Business Weekly this week, ZSE Chief Executive Officer Martin Matanda said the exchange is looking at a number of measures which will increase activity on the stock exchange for the upcoming months.

“The exchange is looking ahead to introduce other listing platforms for SMEs and ETFs in the near future. The exchange has just finished refreshing the Listings Requirements and the new set of the rules is expected to be rolled out in 2018.

Ultimately however listing remains a choice that shareholders have to make depending on their visions for their enterprises,” said Matanda.

“We embarked on a transformation exercise to be ready for new business. The exchange adopted automated trading in 2015 and revived the debt market in 2017 which saw the listing of the Getbucks Medium Term Note, the first such listing in almost 20 years,” said Matanda.

This comes as the exchange has been recording limited activity after nearly a decade of initial public offering drought going as far back as 2007, with Getbucks breaking the spell in 2016 when it came on board.

Apart from a series of unbundlings that saw Simbisa, Axia, Padenga, Zimbabwe Property Investments and Pearl Properties Limited among others being listed in the last 11 years, new listings have been rare.

Matanda however, highlighted that the limited number of foreign direct investment in the country and limited economic growth is also hindering new listings on the exchange.
“From the ZSE perspective however, new listings are associated with a growing economy where new enterprises are being formed or FDI is taking place and culminating in listings.

“It is not hidden that from early 2000 to 2008 the economy shrunk by almost 50 percent. Since 2009 the economy has been recovering in leaps and bounds but probably it has just been recovering to its prior 2000 levels.”

“Once the recovery phase is complete, the expectations would be the formation or entrance of new businesses and the ultimate listing of some. The current positive business sentiment also provides opportunities for businesses to upscale their operations through listing and raising capital on the ZSE,” he said.

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