VICTORIA FALLS, – The Victoria Falls Stock Exchange (VFEX) has partnered with Mauritius-based broker VCG Markets to launch a new financial product called Contracts for Differences (CFDs), aiming to deepen the local capital markets.

A CFD is a financial agreement between two parties to speculate on the price movement of an underlying asset, such as a company stock or commodity. The parties agree to exchange the difference between the opening and closing price of the asset.

According to The Herald, Mr. Justin Bgoni, the CEO of the Zimbabwe Stock Exchange (ZSE) group, described the introduction of CFDs as an exciting development in the investment landscape.

“CFDs allow traders access to a wide range of global markets that would otherwise be difficult to access,” he said, highlighting the product’s potential to offer trading on a regulated platform with access to diverse global markets.

Trading CFDs on commodities like gold, silver, oil, and various global indices simplifies the process for individuals to participate in the market without directly trading the underlying assets.

Mr. Abdallah Garib, CEO of VCG Markets, emphasized the socioeconomic benefits of bringing CFD trading to Zimbabwe. He expressed VCG Markets’ vision of empowering the trading and finance community through innovation, technology, and excellence.

The launch event also featured remarks from Mr. Anymore Taruvinga, CEO of the Securities and Exchange Commission of Zimbabwe. He confirmed that CFDs would be regulated by the commission, which approved the necessary requirements in November 2022. These include capital adequacy, risk management, and disclosure obligations to ensure investor protection.

“The rules are designed to achieve three primary objectives,” said Mr. Taruvinga. “First, to ensure that investors are adequately informed about the risks associated with CFD trading and understand the mechanics of these complex financial instruments.

Second, to safeguard the integrity of our markets by preventing market abuse, manipulation, and other forms of misconduct. Third, to promote fair and transparent trading practices.”

Mr. Taruvinga underscored the commission’s responsibility to safeguard investors, maintain market integrity, and foster investor confidence. He emphasized that introducing CFDs under the supervision of an exchange was a prudent decision given the leveraged nature and risk dimensions of these financial instruments.

VCG Markets is authorized and licensed by various regulators, including the Financial Services Commission in Mauritius, as well as authorities in the UAE, Iraq, and now Zimbabwe under the VFEX.

“They are essentially the first foreign-headquartered broker that we have registered,” Mr. Bgoni noted, highlighting the significance of this partnership in broadening the scope of Zimbabwe’s financial market.

The introduction of CFDs marks a significant step forward for the VFEX and the broader Zimbabwean financial market, promising to enhance market depth and provide new opportunities for investors.

On Tuesday, world shares held steady, just below record highs, as investors awaited highly anticipated U.S. inflation data. Meanwhile, Japanese bonds faced pressure as the central bank scaled back its bond buying program.

According to Reuters, MSCI’s world share index remained flat for the day, sitting just 0.35% below mid-March’s all-time high. In Europe, national and region-wide share benchmarks hovered near record levels, with U.S. S&P 500 futures also showing stability.

While a positive first-quarter earnings season has bolstered stock markets in recent weeks, investors exercised caution ahead of significant U.S. inflation data. The U.S. producer price index, due at 1230 GMT, was the focal point for Tuesday, although attention remained fixated on Wednesday’s consumer inflation figures, a pivotal monthly data release.

Jan von Gerich, chief strategist at Nordea, noted, “Today’s a warm-up, but tomorrow’s U.S. CPI is what people are waiting for.” Expectations are for core CPI to slow from an annual 3.8% in March to 3.6% for April. Investors are eager to determine whether recent upside surprises in inflation are transient or indicative of a sustained trend that could influence Federal Reserve policy.

The benchmark 10-year U.S. Treasury yield slightly decreased to 4.473%, down from mid-April’s five-month high but notably higher than the beginning of the year. A survey by the New York Fed showed Americans expect inflation a year from now to reach 3.3%, higher than the previous month’s forecast.

In other market news, British government bonds outperformed European peers following data showing robust wage growth but a softer labor market. In company updates, Delivery Hero surged 20% after Uber announced a deal to acquire its food delivery business in Taiwan, while Anglo American outlined plans for its steelmaking coal, nickel, and platinum units amid a takeover bid from BHP.

Later in the day, Alibaba is expected to report results, and Federal Reserve Chair Jerome Powell is scheduled to speak.

In Asia, Hong Kong’s Hang Seng index surged as money flowed in steadily from mainland China, buoyed by news of China issuing one trillion yuan in special bonds. Japanese government bond yields rose to their highest since November after the central bank reduced bond purchases unexpectedly.

Despite these fluctuations, the yen remained under pressure against the dollar, while Brent crude futures dipped slightly, and spot gold saw marginal gains.

HARARE – The Zimbabwean Treasury has unveiled plans to broaden the scope of the Victoria Falls Stock Exchange (VFEX) by introducing trading instruments such as exchange-traded funds (ETFs) of the world’s largest listed stocks.

By Staff Reporter

Finance Minister Mthuli Ncube disclosed that the initiative is geared towards attracting capital and positioning the VFEX as a premier destination for global investment opportunities.

Launched in October 2020, the US dollar-indexed VFEX currently hosts 15 listed counters with a combined market capitalization of approximately US$1.19 billion as of Monday. Minister Ncube outlined the ambitious expansion strategy during a two-day investment summit in South Africa, emphasizing the government’s commitment to fostering a conducive environment for international investors.

“We want to make sure that if you want to buy stocks in China, you do not have to go to the Shanghai Stock Exchange, and we want you to come to the VFEX,” stated Minister Ncube during the summit, which was organized by the South African diaspora in collaboration with the Ministry of Finance, Economic Development, and Investment Promotion.

The Treasury aims to diversify the VFEX’s offerings by incorporating foreign non-domiciled companies, thereby attracting a broader spectrum of market participants. Minister Ncube articulated plans to introduce global ETFs on the VFEX, enabling investors to access international stocks directly from Africa. This move is expected to appeal to pension funds seeking to diversify their portfolios with low-risk, globally diversified investments.

ETFs, categorized as pooled investment securities, offer investors the flexibility to trade a diverse range of assets, from commodities to specific investment strategies. Minister Ncube underscored the potential of ETFs to track renowned global indexes, such as the S&P 500 Index, providing investors with exposure to leading firms listed in the United States.

“We want you to come to Victoria Falls if you want to invest globally,” affirmed Minister Ncube. “There is no reason why you cannot list an Apple ETF, a single stock ETF, so you do not have to buy it in New York. You can buy it in Victoria Falls.”

The Treasury’s vision for the VFEX aligns with its broader agenda to stimulate economic growth and enhance Zimbabwe’s attractiveness as an investment destination.

Minister Ncube also announced plans to establish a commodity exchange shortly, further bolstering the country’s financial infrastructure and expanding opportunities for domestic and international investors alike.