During the month of October, Simbisa Brands and National Foods announced their intention to migrate from the Zimbabwe Stock Exchange to the dollar-only Victoria Falls Stock Exchange. The two companies will be joining the likes of Padenga and BNC who also migrated from the ZSE. NedBank is also planning to list its ZDRs on the US$ bourse with Getbucks having hinted plans to migrate from the ZSE to the VFEX as well. The platform is seen as a gateway for Zimbabwean companies to raise capital in foreign currency and allows investors to trade in foreign currency.
We anticipate that as more companies list on the VFEX, trading activity on the exchange starts gaining momentum as more options to invest in are presented to investors on the platform. This is likely going to translate to capital appreciation for investors. Already, there has been capital appreciation for the companies listed on the VFEX since inception except for BNC.
In addition to share price appreciation, returns are also from US$ based dividends. Of note is Caledonia’s quarterly dividend. Market Cap on the bourse for the second quarter of 2022 increased 7.72% to US$273mn from US$254mn in the first quarter of this year driven by improved foreign participation. Currently, market cap is at US$268mn. On this background, we believe counters migrating to the VFEX which are currently undervalued on the ZSE will see their stock prices correcting to fair value.
