• Axia records first trade on VFEX
  • Share price aligns to average exchange rate
  • VFEX gains ground against ZSE, nears 50% of its market cap

Harare - Axia Corporation Limited debugged on the Victoria Falls Stock Exchange (VFEX) on Monday, the 6th of March, 2023. This follows the delisting of the counter from the Zimbabwe Stock Exchange (ZSE) on the 28th of February, 2023, as it set to migrate and list on VFEX on the 3rd of March, 2023.

The retail and distribution group, Axia Corporation Limited, listed on the ZSE on the 17th May, 2016, following it's unbundling from Innscor Africa Limited. The company initially operated as a subsidiary to Innscor before becoming an associate company following the unbundling. After raising concerns around lack of liquidity and valuation challenges on ZSE, Innscor and its associate companies which include Simbisa Brands Limited, National Foods Holdings and Axia Corporation Limited announced their plans to migrate to the US$ denominated market, VFEX. Another associate company, Padenga, had already listed on the bourse 2-years earlier.

After listing on VFEX on Friday, the 3rd of March, 2023, Axia recorded its first trade on Monday, the 6th of March, 2023. The counter exchanged a total of US$217 on its first day of trading, after listing at a price of US$0.14 which has so far been constant. Volumes slowed down on Tuesday as the stock recorded an exchange of US$202. After migrating from ZSE with a push factor of constrained liquidity, Axia seems to have settled at a worse off position as liquidity on VFEX remains curtailed following the revamp of demand on ZSE.

However, Axia’s associate company, Innscor, exchanged a total of US$152 on its first trade on VFEX while National Foods Holdings only recorded a trade on the 6th session after its listing. Simbisa Brands Limited traded a mere US$96 on its debug on VFEX, which thus entails Axia attracted more demand on its first trade compared to its recently listed associate companies.

Axia listed at a share price of US$0.14 on VFEX, having delisted from ZSE at a price of ZWL$132.25. By the 3rd of March, the ZSE had risen by 6% from the time of Axia’s delisting from the bourse. Adjusting for the average share price movement on ZSE, Axia’s closing price can be assumed at ZWL$140.185. Based on the prevailing interbank exchange rate at the time of listing on VFEX, the ZSE adjusted closing price therefore translates to US$0.16, which is above the listing price of US$0.14 by 2 cents. However, based on the prevailing parallel market rate, the ZSE adjusted closing price converts to US$0.12 which is below the listing price of US$0.14 by 2 cents. Arithmetically, Axia listed at the average of the 2 relevant exchange rates in the market. However, this can be concluded to be a trend within the associate companies as Innscor listed at US$0.8381 which was an average of the 2 exchange rates as well, according to an Innscor article in an Equity Axis publication, The Axis (https://bit.ly/TheAxisOnline).

Following the listing of Innscor on VFEX, the US$ denominated market saw its market capitalization sky rocketing to almost 45% of the overall ZSE in US$ terms. The listing of Axia, which adds US$78 million to the market capitalization of VFEX, further fuels the proportion of VFEX to ZSE to 1:2 in terms of market capitalization. This has an effect of drawing more attention to VFEX as it continues to garner ground against the ZSE.

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