Zimbabwe seeks entry into MSCI frontier markets index for dollar stocks

Detailed summary

As it seeks to draw international investors and boost liquidity.

Zimbabwe wants securities listed on its dollar-only stock exchange to be added to the MSCI Frontier Markets Index as it seeks to draw international investors and boost liquidity.

The Victoria Falls Stock Exchange has written several times to MSCI for consideration, the bourse’s Chief Executive Officer Justin Bgoni said by phone Wednesday from the nation’s second city, Bulawayo.

Bgoni didn’t provide further details on the securities which may be included. MSCI didn’t respond to an emailed request for comment.

The MSCI Frontier Markets Index has 246 constituents and captures large- and mid-cap companies across frontier market countries. It also covers about 85% of the free float-adjusted market value in each country, according to information on its website.

VFEX, established in 2020, this year overtook Zimbabwe’s main stock exchange in Harare, where shares trade in local currency, and has a market value of $8.96 billion. Even so, liquidity remains thin with daily turnover at around $2.8 million.

The southern African nation has never been included in MSCI’s frontier-markets index and Zimbabwean equities are classified as a standalone, according to Shelton Sibanda, chief executive officer at Imara Asset Management, the country’s oldest brokerage. The index has a lot of criterion around admission, “but liquidity is a key determinant,” he added.

“This then feeds into another determinant; ability of foreign investors to access the market seamlessly,” Sibanda said. “Looking at the VFEX at the moment, Innscor Africa, Padenga Holdings, Simbisa Brands and maybe AXIA Corp to a certain extent would clear some of the hurdles.”

The exchange has attracted several listings this year including Old Mutual and Econet InfraCo, the country’s biggest telecommunications infrastructure firm.

Even as many of the companies whose shares are being targeted for tokenised trading are pushing back.

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