Programme launched to reform and strengthen Zimbabwe’s capital market
Harare – Zimbabwe is looking for readmission into the Standards and Poor’s Jones Indices (S&P DJI) also known as S&P African indices, as it puts hope on foreign currency allocation from the interbank foreign exchange market|Raynold Mhotseka, EQUITY AXIS||
The S&P African Index is used by investors as a benchmark for the African market; it covers companies listed in 13 African countries and tracks the stock market prices of those companies.
It is the largest global resource used by investors, with over one million indices across all continents.
On 24 December 2018, the S&P decided to exclude Zimbabwe domiciled shares citing foreign currency shortages and inflation concerns.
As at October 31, Zimbabwe had 18 companies that are part of a larger index — contributing to 12 S&P African Indices, with a total market value of $12.5 billion.
In an exclusive interview with Equity Axis, Zimbabwe Stock Exchange (ZSE) chief executive Justin Bgoni reiterated that the exclusion of Zimbabwe shares was because of challenges regarding the repatriation of dividends and capital and thus, funding through the interbank provides chances for reinstatement to the S&P.
“What we’re happy about now is that the interbank market seems to be ready more and more. We have agreed with the Reserve Bank that at least 15% of the interbank (forex allocation) should be used to repatriate dividends and capital, so we hoping as this works we will be able to go back,” Bgoni said.
“So let’s see how the interbank works then we can go back to S&P,” he added.
The removal of Zimbabwean shares was widely interpreted as a reflection of lack of investor confidence on the local market characterised by an unstable multi-currency regime.
Meanwhile, the ZSE has been recording a series of successive bull runs as investors seeks for cover in the face of the continuous depreciation of the local currency, the RTGS$ against the US dollar.