ZSE to finalise demutualisation this month

THE Zimbabwe Stock Exchange (ZSE), one of the oldest bourses on the continent, is now expected to finalise the demutualisation exercise by the end of this month.
The process has been on the cards for several years with government saying lack of funding was hindering the process.

Demutualisation refers to the transformation of a mutual organisation into a publicly-traded firm. A mutual company is one that is owned by members for their benefit.

The transformation of the ZSE into a company will strengthen its governance system by separating the ownership structure and the trading participation rights of the members of the exchange.

Currently, the ZSE is controlled by stockbrokers through a mutual society.

In the initial shareholding structure, government will control 32 percent while stockbrokers will hold 68 percent.

Sources told C&M last week that significant progress has been achieved and the process of transferring assets from the current ZSE to the newly registered ZSE Limited was underway.

“At the moment the stock exchange (ZSE) is undergoing the registration of the new entity as a stock exchange and the transfer of assets and liabilities from the existing entity to the new entity,” said a source at the ZSE.

“It is expected that demutualisation will be done before the end of this January.”

The ultimate vision is to get the ZSE to be listed.

This would also mean that the ZSE will be able to attract new capital and new shareholders.

Stockbrokers have largely been uneasy about the developments, especially the delays in completing the demutualisation process which has seen the local bourse lagging behind other regional stock exchanges such as the Johannesburg Stock Exchange.

The market has poorly performed over the past two years with a cumulative loss on the industrial index of 35 percent between January 2013 and October 2015.

The market capitalisation had declined to US$3,4 billion by October 2015 from a peak of US$5,2 billion in 2013.

Turnover, which peaked at US$485,7 million in 2013, significantly dropped in 2015 to US$203,3 million (10 months to October), the lowest since 2009. – FinGaz

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