DELISTINGS from the Zimbabwe Stock Exchange (ZSE) and Victoria Falls Stock Exchange (VFEX) may constrain the country’s capacity to channel domestic savings into key sectors, experts say.
Africa Economic Development Strategies (AEDS), a Zimbabwe-based development think tank, says the growing number of companies leaving the ZSE and VFEX is a cause for concern.
AEDS said the delistings highlight significant structural challenges in the country’s stock exchanges, raising questions about the role of the equities markets in supporting long-term economic growth.
Stock exchanges play a critical role in modern economies by enabling companies to raise long-term capital for expansion, industrialisation and innovation while providing investment opportunities for pension funds, institutional investors and ordinary citizens.
A vibrant stock market promotes corporate transparency, improves liquidity and channels savings into productive sectors, supporting employment creation and broader economic development.
However, AEDS said that the markets’ susceptibility to value erosion, currency instability and perceived risk in recent years undermined their effectiveness in performing these functions.
The central bank has, since April 2024, made significant progress in stabilising the domestic currency, highlighted by single-digit annual inflation (3.8 percent) and the accumulation of over US$1.4 billion in foreign currency reserves and gold.
The exchange rate has stabilized around ZiG25 per US dollar, helping anchor price stability and reduce parallel market premiums from over 100 percent to just over 20 percent.
“Since 2020, more than 10 companies have delisted or initiated delistings from the Zimbabwe Stock Exchange (ZSE) and the Victoria Falls Stock Exchange (VFEX).
“These are exits from public markets altogether — distinct from companies that migrated between the ZSE and VFEX, which represent repositioning within the market rather than departure from it,” said AEDS in its first-quarter report.
“The exits span telecommunications, manufacturing, hospitality and retail. They are not isolated corporate events.
“They reflect a reassessment of whether the domestic equity market still performs its core economic function: preserving and compounding capital in hard currency terms.”
The economic research and advisory firm said some firms voluntarily exited the market after concluding that listing no longer supported their strategic objectives.
Others were forced out by weak valuations and limited access to capital.
“Some departures were voluntary — boards concluding that listing no longer served their capital allocation objectives.
“Others were distress-driven — companies that could not sustain listing obligations or access the capital markets for recapitalisation precisely because depressed valuations made equity issuance prohibitively dilutive.
“Both categories are consequences of the same underlying market dynamics, but they operate through different mechanisms and carry different implications. The arithmetic is stark.”
AEDS said the ZSE had suffered a dramatic destruction of market value over the past four years, largely driven by policy uncertainty and exchange rate instability. – Herald
