Automated trading system to double ZSE turnover

Business
THE Zimbabwe Stock Exchange (ZSE) annual turnover is expected to nearly double to US$1 billion after the setting up of an automated trading system.

THE Zimbabwe Stock Exchange (ZSE) annual turnover is expected to nearly double to US$1 billion after the setting up of an automated trading system (ATS), chief executive officer Alban Chirume has said.

BY NDAMU SANDU

The automation system will replace the current manual system where brokers place orders on bids on a board during trading sessions on the floor for allotment to be done.

“In Kenya and Botswana, turnover increased two to three fold [after automation], which means we expect our annual turnover to increase from the US$450 million to close to US$1 billion,” Chirume told Standardbusiness last week.

He said the automation would cost over US$2 million, adding the current platform was fraught with risks. He said automation was expected to extend the trading hours on ZSE.

“Basically, dealers can trade longer. We expect that brokers can deal from their own offices. They wouldn’t come for call over sessions,” he said.

Chirume said automation and the coming on board of the central securities depository (CSD) would help in the settling of transactions.

Chengetedzai Depository Company was in 2010 awarded a tender to run the country’s first securities depository system.

Chirume said he was hopeful Chengetedzai would go electronic by the end of September or October.

“Both systems will be talking to each other, reducing elements of fraud, whereby people sell stocks which they do not have, selling fraudulent certificates,” Chirume said.

“It will determine the ownership so before the deal is done, it will check whoever is selling has the assets [share certificate] and whoever is selling has the money.”

ZSE has remained resilient in the face of problems facing the economy.

Market capitalisation is around US$5,7 billion for 63 active listed counters. This market capitalisation is far below the Lusaka Stock Exchange at over US$9 billion where 22 companies are listed.

Chirume said listed companies were going through difficult times in terms of working capital and liquidity.

“Sometimes the companies are undervalued and if they can access the correct capital we will then see that the value might grow up. Liquidity crunch is on the investors’ side,” he said, adding that disposable incomes in Zimbabwe were low.

He said the domestic investor was literally looking at bread and butter issues and not investing on the stock market.

As a result, Chirume said over 40% of trade was foreign and could go as much as 49%, which means the appetite was more on foreigners.

“It’s constrained in the sense that foreigners are not trading much. We are trading 49% or 40% of a small figure. We will see these things change once our economy starts getting to grips,” Chirume said.

“We are in the top 10 in terms of the number of listed companies in Africa. That’s an indication that if we can get our market to be correctly valued we have a lot of potential.”

He said in Africa ZSE was in the top five in terms of liquidity ratio, meaning that for the total market capital there were more trades compared to other markets.

“In relative terms, if things go right economically, we will move up significantly,” he said adding that there is a correlation between total market capitalisation and Gross Domestic Product.

Related Topics