Swelling investor interest stirs Zambian bourse

Lusaka – The Lusaka Stock Exchange is expected to increase its market value by US$15 billion in the short- and medium-term, following increased interest from local and foreign companies to list on the local bourse, its chief executive, Beatrice Nkanza, has said.
With about 19 listed companies trading on the bourse, the Lusaka Stock Exchange (LSE) is projected to grow its capacity to US$9 billion from US$3 billion capitalisation at its inception in 1994.
Nkanza told The Southern Times last Tuesday, that there is increased interest from both local and foreign companies that seek to open trading on the local market.
Despite a relatively quiet market presently, many companies have expressed willingness to list their shares on the local stock exchange by the first quarter of 2013, Nkanza said.
Several listed companies are gearing themselves by reviewing their share value during the rebasing period as Zambia seeks to revert to the kwacha-ngwee currency, which comes into effect on January 1 next year.
“We see a lot of companies coming on the market by first quarter 2013 to list their shares.
“Many listed companies are now reviewing their share prices in order to enable them retain value after the currency has been rebased in conformity with the new currency,” she said.
The local bourse plans to close all trading seven days before December 31, 2012, to allow, and prepare, for a transition to the rebased currencies.
Ghana and Mozambique are among African countries that have rebased their currencies, with the process in Mozambique said to have been successful.
Media reports in Ghana claim that the Central Bank is facing resistance from the public that are opting to retain the old currency (cedis) to carry out their businesses for lack of adequate sensitisation.
But Nkanza is optimistic that most of the foreign companies operating in Zambia, mainly in mines, will reconsider their position and consider listing on the local bourse to raise long-term finances for their projects.
She added that raising equity, debt and financing of various projects needs the capital market’s advisory role for projects to succeed and remain sustainable.
The LSE head is also optimistic that the government will issue a decree compelling foreign companies, especially mines, to dual list on the local bourse while maintaining their status quo on foreign capital markets to foster the local market’s growth.
“I think the government can still make a decree and convince the mines to list locally but we are happy that First Quantum Minerals Limited has made depository receipts (US$40 million), the first in Africa and we would want all of them to learn from us,” Nkanza said.
This, it is envisaged, will be spurred by the intended listing of former Zambian parastatals on the market following the liberalisation of the market in which the private sector is now the driver of the economy.
She appealed to major local companies among them Tanzania Zambia Railway Authority, Zambia Telecommunication Limited, Zambia Electricity Supply Corporation (Zesco) and pension funds, to consider raising long-term capital from the local exchange.
She urged the power utility, Zesco to maximise the available platform provided by the Lusaka capital market and raise either debt, equity and other finances to sustain power generation, as the country looks poised to grow beyond seven percent of the Gross Domestic Product (GDP) by next year.
“Zesco needs to shift their way of doing business and maximise on the availability resource at the Lusaka Stock Exchange to raise their capital for sustained power supply to the country because the economy is looking up for growth in the next few years.”
Key among the companies that have used Lusaka capital market in raising equity for their projects are Zambia’s leading telecommunication provider, Airtel, which raised about US$250 million; Copper Energy Corporation, which raised an International Public Offer (IP0) to increase and broaden shareholding to the Zambian public a few years ago, which should be emulated by other companies.

November 2012
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