ZIMBABWE Stock Exchange (ZSE) chief executive officer Justin Bgoni (pictured) says real estate investment trusts (REITs) experienced a 635% increase in volumes in 2024 compared to the prior year, as the market increasingly adopts the product as an alternative investment portfolio.
REITs provide investors with a pathway to diversified property portfolios without the need for direct property ownership.
As of last Friday, REITs had a market capitalisation of ZiG1,6 billion (approximately US$62,75 million) on the ZSE.
In emailed responses to businessdigest, Bgoni stated that REIT volumes surged to 225,8 million as of November 30, 2024, from 30,7 million in the prior year.
“We witnessed the growth of real estate during the year. The promotion of real estate investment trusts as a new investment opportunity has led to increased activity in the market,” he said.
“CFDs (contract for differences) product diversification has been key this year, with the introduction of CFDs as an alternative security. The introduction of CFD trading deepens our capital markets and protects investors by allowing them to use brokers registered and licensed locally.”
Bgoni also noted that product diversification had increased.
The volume of trades for REITs increased by 635,44% to 225,84 million in the period under review.
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He said the Zimbabwe Gold (ZiG)’s arrival improved trading adjustments and brought some stability on the bourse.
“We witnessed increased participation from retail investors on the ZSE and Victoria Falls Stock Exchange (VEFX), which was made possible by direct access to mobile platforms such as ZSE Direct and VFEX Direct,” Bgoni added.
The ZSE chief said the costs of transacting on the bourse remained relatively high. He, however, welcomed the government’s proposal to reduce the capital gains withholding tax in the 2025 budget to 1% effective January 1, 2025.
“We have been working closely with other market players to lobby through the Capital Markets Association of Zimbabwe, and we appreciate the results of the lobbying, which managed to reduce the capital gains withholding tax to 1% effective 1 January 2025,” he said.
Bgoni said the VEFX also experienced increased market activity, with the monthly average turnover value increasing by 73,54% to 3,39 million as of November 2024. The number of trades also increased by 34,45% to 11 670 in the period under review.
“The record trade on VFEX resulted from a negotiated trade with Axia Corporation, Simbisa Brands Limited, and Innscor Africa Limited,” he said.
He said a negotiated trade was a transaction in which the terms were discussed and mutually agreed upon by the parties involved rather than determined by formal, external, and automatic processes such as market prices and matching criteria.
“It involves direct communication between buyers and sellers to establish the price, timing, quantity, and other conditions of the deal,” Bgoni stated.
“It must be at least 5% of the issued share capital or at least US$5 million. This trade, however, does not impact the daily closing prices. On our exchange, it goes through the negotiated board, not through the regular board. This is all guided by our trading rules.”
In 2025, he said the outlook for both VFEX and ZSE were to increase listings and the migration of the settlement cycle to T+2 settlements.
The abbreviations T+1, T+2, and T+3 refer to the settlement dates of security transactions that occur on a transaction date plus one day, plus two days, and plus three days, respectively.
“The ZSE and VFEX are doing several initiatives to improve market activity, and these include product diversification through ETFs, REITs, CFDs, depository receipts, and commodities exchange,” Bgoni said.
