- This comes after the Group incurred over a ZWL1 billion in exchange losses
- Vfex is key in preserving shareholder value
- ART will join other 12 companies already on Vfex
Harare- The Zimbabwe Stock Exchange (ZSE)- listed diversified outfit, Amalgamated Regional Trading Holdings is considering listing on the United States dollar-denominated bourse, Victoria Falls Stock Exchange (Vfex) as the local currency continues a rate and mouse chase.
In 2023, year-to-date, the Zimbabwe dollar has depreciated by 90% while year-on-year by 95%. This poses a huge danger for companies trading in Zimbabwe dollars through loss of shareholder value while incurring huge exchange losses.
VFEX is an offshore subsidiary of the ZSE, which among other conditions for a listing, requires any company that seeks a listing to have a strong foreign currency revenue base.
The major and common pull factor that differentiates the two bourses is that because Vfex trade is done in US dollars, so exchange losses are cut significantly.
Also, because trade on Vfex is in the US dollar and the US dollar does not fluctuate in performance, the bourse is key in preserving investor value by trading, reporting and projecting in a hard currency.
Listing on the Vfex entails the failure of the local currency as a store of value and a unit of account.
ART Holdings will join other 12-listed companies, including blue chips like Innscor, BNC and Caledonia.
In the presentation of financials for the half-year-ended 31 March 2023, the Group’s Chairperson Thomas Wushe said: “The Board has assessed the market conditions and believes there remains a compelling case to move to the Victoria Falls Exchange in terms of trading costs and reporting.”
During the period under review, the Group incurred exchange losses amounting to ZWL1.976 billion resulting in ZWL1.7 billion in loss after tax.
During the period, the Group successfully commissioned the new Tissue Mill PM2 although power and raw material shortages dampened production.
Given that the Group successfully joins Vfex, there will be an increase in shareholder value, and a cut in exchange losses and trading costs despite liquidity challenges on the bourse.
With rampant inflation, which is expected to be worse during and after the 2023 general elections, ZSE has lost the blessing of being the hedge against inflation.
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