Investors troop to Vic Falls bourse as sentiments shift

INVESTORS warmed up to the Victoria Falls Stock Exchange (VFEX) during the first quarter of this year, injecting US$5 million into four counters trading their stocks on the two-year old bourse, a report by Old Mutual Investment Group, said this week.

The US$5,27 million represented a huge surge for the bourse, which had turned over US$114 000 during the fourth quarter of last year.

“Trades in Q1 (first quarter) amounted to US$5,27 million compared to US$114,544.74 (during the fourth quarter),” Old Mutual said.

“However, market capitalisation declined in the quarter by 2,35% to US$253,65 million suggesting revaluation following listing. Overall, increased trade suggests increased dollarisation in the economy,” the financial services group added.

Old Mutual’s report is the latest that gives VFEX a positive outlook following months of pessimism that had been triggered by its struggle to attract listings.

Last week, researchers at Wealth Access Securities said bulls will camp on the bourse’s mining counters this year, as markets respond to robust demand in electric vehicles (EVs).

They tipped Bindura Nickel Corporation (BNC) to rebound as appetite rises on the back of higher demand for minerals required for manufacturing EV batteries, including nickel and graphite.

Global lithium demand is projected to rise 36 fold in the coming decade, with Zimbabwe among the heartthrobs of the push whose framework is being shaped now. BNC presides over some of the region’s biggest nickel assets, with significant expansion scope at unexploited greenfield projects at Hunters Road.

The EVs revolution also presents opportunities for graphite mining, an industry that has been dying since the near collapse of Lynx Mine, in the past few years.

Wealth Access also sees unblinking bulls on VFEX-listed Padenga, which presides over two key goldfields in the southern African country.

Jersey-headquartered gold producer, Caledonia Mining Corporation also trades its stocks on VFEX.

“Gold prices have been on the rise given its safe haven status,” Wealth Access’ report, which also reviewed the first quarter of this year, reads.

“There has been a trend recently by governments to push for clean energy and a push towards clean energy vehicles so as to achieve low carbon societies.

“It is estimated that the proportion of EVs and hybrids in global auto sales might be over 50% by 2030. We expect a drastic change in the automobile industry and materials sector.

“A lithium-ion battery requires lithium, cobalt, nickel and graphite as significant materials. The demand for these resources is on a surprising uptrend.

“We also noted that nickel is going to form part of the cathode of choice in EVs. As such, mining groups such as BNC, are set to experience growth as the EVs story unfolds. On the other hand, Caledonia and Padenga Holdings are set to benefit from the gold price trend. To this end, investors should start taking positions on the Victoria Falls Stock Exchange (VFEX),” the report adds.

Wealth Access report also states that: “The 2021 deficit was caused by 17% growth in global nickel demand driven by the stainless-steel sector, which accounts for just over 70% of all nickel demand, and batteries”.

It says it was likely that demand for nickel for the production of stainless steel and non-stainless steel would hold up in 2022, which will keep the market largely balanced this year, leaving little room for currently depleted inventories to be restored.

“Our March 2022 equity research note for Bindura Nickel Corporation, highlighted our bullish view on BNC with a target price of US9,40 cents per share at least in the coming financial year,” the report states.

“This view is based on both short-term technical stocks buying pressure and potential multiple uprating of growth in Zimbabwe’s nickel mining business.”