Chief executive officer of Zimbabwe Stock Exchange (ZSE), Mr Justin Bgoni, has expressed concerns that the potential departure of telecoms giant, Econet Wireless Zimbabwe, could signal a failure by the local bourse to meet shareholder expectations. Bgoni, who expressed the concern in an interview on the ‘Business Focus’ programme on Capitalk FM last week, however, assure investors that the market would survive the potential loss.
Bgoni, who is also the chief executive of the Victoria Falls Stock Exchange (VFEX), spoke on the landmark corporate action, which he said was subject to shareholder approval at the end of February. “If the shareholders approve the delisting, it means the shareholders have decided that the platform hasn’t met their expectations,” the ZSE boss said.
Econet has cited chronic undervaluation as its primary reason for seeking to leave the ZSE, a move that would remove a counter constituting approximately 35 percent of the bourse’s market capitalisation. Mr Bgoni attributed the undervaluation not to a (local) flaw in the exchange itself, but to macroeconomic constraints. He pointed to the significant liquidity challenges facing the ZSE, which trades exclusively in the local Zimbabwe Gold (ZiG) currency.
“For the share price to go up, there needs to be (local) natural demand for … if the money to buy it is constrained, then there tends to be less demand on the share,” he explained. “We are probably one of the few exclusively (local) currency – denominated platforms . . . and because of the liquidity, it is constrained quite a bit,” he noted.
Responding to a listener’s question that the departure of both Econet which, together with Delta, account for over 90 percent of turnover, could “kill the market for good,” Bgoni pushed back against the doomsday scenario.
He argued that capital freed from Econet would likely be redeployed to other counters, and pointed to the company’s complex restructuring, which will see its green cycle business list on the over-the-counter market, retaining some investment avenues for shareholders.
