VFEX corrects price level distortions
THE Victoria Falls Stock Exchange Limited (VFEX) has rebased the VFEX All Share Index with effect from this month as it moves to correct price level distortions.
The All Share Index tracks the performance of all companies listed on the stock exchange.
Its regular updates reflect current market conditions, providing a comprehensive view of the economy and the potential of listed companies.
Investors use the index as a benchmark for the entire stock market and to track their portfolios.
The new All Share Index was rebased to 100 points, according to a statement released by the bourse last week.
“We will continue to avail the old All Share Index, however, it will not be published,” VFEX chief executive officer Justin Bgoni said.
“The rebasing has been necessitated by the migrations which occurred and there were some distortions on price levels hence the need to rebase. We believe that this will allow the investing public to better judge the performance of the bourse. The additional counters on the bourse will not distort the performance of the index given the stability which we have been witnessing.”
VFEX is a subsidiary of the Zimbabwe Stock Exchange (ZSE), which was established in July 2020.
The waterfall bourse has witnessed a torrent of listings in recent months, with several companies parting ways with the ZSE to move to the foreign currency-denominated bourse.
Big companies which have so far delisted from the beleaguered ZSE and moved to the VFEX include Simbisa Brands Limited, Nedbank Group Limited, Caledonia Mining Corporation, Bindura Nickel Corporation, Padenga Holdings Limited, Seed Co, Innscor, First Capital Bank and National Foods.
The VFEX, according to FBC Securities, remains a viable US dollar liquidity option for investors, offering returns and value preservation in a more stable currency than the local currency.
The bourse offers counters a number of incentives; for instance, it is easier to move money in and out of VFEX. Foreign shareholders can repatriate their dividends freely in foreign currency and make settlement proceeds from selling shares outside the country.
Companies listed on VFEX have a better chance to raise equity capital in foreign currency to support capital expenditure, working capital and regional expansion.