Technology to attract youthful investors to Zimbabwe’s capital markets

The ZSE, established in 1894, is one of the continent’s oldest bourses. After independence, it became the domain of key Zimbabwean companies, but the wider population was largely excluded from stock ownership. That all changed in 2015 when the exchange migrated to an online trading platform

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• Platforms such as ZSE Direct and C-Trade, have allowed ease of buying and selling of shares by retail investors.
• C-Trade Fantasy is a game in which you have a demo/live trading account and trade in securities. This is meant to increase knowledge in investments as well as promote a culture of saving.
• The Victoria Falls Stock Exchange (VFEX) also launched an online trading platform, VFEX Direct, as it seeks to simplify the trading processes to lure retail investors to the bourse.

Before its digitization, trading on the stock exchange was primarily an exclusive activity reserved for investment professionals. The exchange itself operated manually, with traders on the floor shouting over each other.

The ZSE’s 2020 research found that individual Zimbabweans made a meagre amount of contributions to the regional capital market. A few of the obstacles mentioned are a lack of understanding of the investment process and the notion that it is the realm and preservation of the wealthy in society.

According to an article by Mail and Guardian published May 25, 2022, this survey prompted the bourse to launch ZSE Direct, a product that would make access to the market straightforward even for first-time investors.

ZSE Direct and C-Trade

Platforms such as ZSE Direct and C-Trade, have allowed ease of buying and selling of shares by retail investors. The introduction of easy-to-use trading tech platforms such as ZSE Direct and C-Trade has also added to the attractiveness of equities as an asset class.

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“ZSE Direct came in to complement the platforms already in the market to provide more choice for investors and increase retail participation as we drive financial inclusion. An investor can register, fund their wallet, buy and sell securities and monitor market performance remotely through the web portal or mobile application,” said Justin Bgoni, the ZSE chief executive.

Another electronic platform, C-trade, allows users to buy and sell financial instruments such as stocks and bonds using mobile phones or laptops and gives brokers access to significant online investment traffic.

According to the Securities and Exchange Commission of Zimbabwe (SECZIM), which regulates the capital markets, retail investors trading on the ZSE through C-trade now account for more than half of the trades happening on the local bourse.

ZSE Direct was launched in September 2021 and closed the same year with 3 149 total users, it has since grown to 9 121 total users.

According to an article by African Markets dated January 25, 2022, active users at 939 for the four months to December 2020 closed 2021 much higher at 4 737, reflecting the growing interest from retail investors. The growth in active users was also reflected in the growth in the number of trades from 1 766 for the four months to December 2020 to 31,142 for the year to December 2021.

On C-Trade the total number of registrants or first-time investors shows a significant uptake comparable to the approximately 7 500 active investors accrued since dollarisation.

“In the ensuing year, we expect more activity in the market mainly coming from retail investors, due to availability and accessibility of trading platforms and new listings,” said EFE Securities in their FY2021 Review and 2022 Outlook. In the prior year, retail investor activity improved, bringing more liquidity to the market. Foreign outflows continued to outstrip inflows on the market, therefore depressing prices as locals failed to cope with the supply. However, with a better foreign currency allocation system, we expect a turnaround in this space with more foreigners gaining confidence to buy in the local market,” said the stockbrokers.

C-Trade Fantasy

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C-Trade Fantasy is a game in which you have a demo/live trading account, and you trade in securities. The performance will be judged on how the securities perform in real life. This fantasy game is meant to increase knowledge in investments as well as promote a culture of saving.

Here is how it all works:

• Eligible participants register for the fantasy and, at the same time, create their live trading accounts
• Participants will each be allocated ZW$1,000,000 virtual cash for practice purposes
• The platform will have access to live market data to enable simulated securities trading
• It will also act as a demo platform for those requiring a practical feel of our markets without having to part with real money
• Trading will be as if one is trading on the real market but using virtual money
• Participants will be able to test their skills in analyzing and picking the right stocks to build their virtual portfolios

The platform will track the performance of the virtual portfolios for each participant and rank them according to performance. The highest performers will various prizes monthly, while the best performers at the end of each six-month season will be awarded the full value of their portfolio in real money for their investment in the live market. Participants can also create their mini-leagues among their friends and families to compare their portfolio performance.
The best performers see their virtual portfolios converted to actual portfolios. To sweeten the deal, participants will be receiving free professional training and ongoing coaching from Piggy Bank Advisory investment researcher Batanai Matsika.

You will need to have a bank account to participate; if you don’t have one, Nedbank will assist people in opening accounts. C-Trade Fantasy will go live on September 15, 2022.

VFEX Direct

The Victoria Falls Stock Exchange (VFEX) also launched an online trading platform, VFEX Direct as it seeks to simplify the trading processes to lure retail investors to the bourse.

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The Victoria Falls Stock Exchange (VFEX), a subsidiary of the Zimbabwe Stock Exchange (“ZSE”) established to kick start the Offshore Financial Services Centre (OFSC) earmarked for the special economic zone in Victoria Falls, was established in 2020. Its trading currency is United States Dollars.

Since the launch of VFEX in 2020, trading has mainly been dominated by institutional investors, and from the feedback received, retail investors would also like to participate in the VFEX. In the press release, VFEX CEO Justin Bgoni said VFEX Direct was mainly developed with retail investors in mind.

VFEX Direct will be accessible through the web portal and mobile application (Google Play Store and Apple App Store).