… Zambia’s Securities Market Sees Unprecedented Growth, with Increased Investor Participation and Rising Stock Prices, Amidst SEC’s Push for Greater Market Development and Financial Inclusion
By Francis Maingaila
Lusaka, Zambia24 – (30 -2024) — The Zambian Securities Market has experienced significant growth, marked by increased trading activity and rising stock prices.
A major milestone was achieved with 606,000 individuals—nearly 10% of the adult population—now actively investing, surpassing the Securities and Exchange Commission’s (SEC) initial target of 3%.
Philip Chitalu, Chief Executive Officer of the SEC, acknowledged this progress but emphasized the need for further expansion in investor participation.
“We have seen a remarkable increase in stock prices, from 18 ngwee to four kwacha and eventually to 10 kwacha by June 30, 2024,” Chitalu said.
He attributed this upward trend to regulatory changes such as a mandatory offer for tax parity and the acquisition of a major stake in Pamodzi by a Middle Eastern company, which “ensured equitable treatment for minority shareholders.”
Despite the delisting of Invest Trust from the Lusaka Securities Exchange (LuSE) due to its acquisition by the Central Bank, market capitalization rose by 15.5%, from 102 billion kwacha to 118 billion kwacha. This growth was driven by a 13.84% increase in market capitalization and a 13% rise in assets under management in collective investment schemes.
Equity performance was notably strong, with the market value increasing from 102 billion kwacha to 213 billion kwacha, and the Lusaka Securities Exchange Index reaching a historic high of 10,871 points—an 8.42% rise.
However, there were discrepancies in reported figures for the index and market capitalization, which should be clarified for consistency.
The turnover-to-market capitalization ratio remains low compared to regional benchmarks, highlighting the need for improvement in liquidity. Chitalu emphasized that “this ratio ideally should be 7% or higher.”
The SEC is focused on expanding the collective investment scheme sector, with current funds ranging between 80 and 90 million dollars and a goal of achieving a 100 million dollar fund.
Chitalu stressed the importance of increasing both local and foreign investment to support ongoing market growth. The SEC’s data reveals a total of $2.5 billion in savings, with $2.2 billion in local savings and $300 million in foreign investments.
Only $13 million of the local savings is invested abroad, underscoring the need to boost international investments.
The performance of corporate bonds and collective investment schemes was also notable. The CEC Greenbelt project raised $52 million during the review period, but additional funding is needed, particularly in the power sector.
Despite the $2.5 billion in corporate bonds, this figure is still below market targets. Government bonds saw a 20% increase in trades, totaling 2,186 trades in the second quarter, although the nominal value of bonds traded decreased by 23% to 13.8 billion kwacha.
Outstanding government bonds amount to approximately 278 billion kwacha, reflecting the market’s liquidity.
Chitalu highlighted the SEC’s involvement in green finance initiatives, emphasizing the need to address environmental challenges through sustainable investments.
“Our Capital Markets Master Plan aims to raise collective investment schemes to $100 million and secure 27 new listings within three years,” Chitalu said.
He called for media support to enhance public knowledge of financial products and achieve these goals.
The SEC remains committed to advancing market development, financial inclusion, and sustainable finance, positioning Zambia’s capital markets for future growth and resilience.