“Zambia’s Capital Markets Resilience Amid Challenges”

… Chitalu notes that this development points towards positive economic growth ahead.

By Francis Maingaila

Lusaka, Zambia24 (27-05-2024) – Zambia’s capital markets have shown remarkable resilience, evident through successful green bond issuances and the introduction of new financial instruments, bolstering liquidity.

Phillip K Chitalu, CEO of the Securities and Exchange Commission, Zambia, highlighted positive indicators amid market challenges, including a significant surge in the Lusaka All Share Index and market capitalization growth.

During a recent media briefing, Chitalu stressed the pivotal role of capital markets as vital economic indicators, fostering liquidity for businesses and investors via diverse financial instruments.

He noted a mixed performance in the first quarter of 2024, with fluctuating stock prices influenced by global economic trends and the National Emergency.

Chitalu underlined the importance of effective allocation in promoting growth and addressing liquidity challenges in Zambia, citing factors such as exchange rate depreciation, high maize grain prices, and fuel costs contributing to a rise in inflation to 13.7%.

Despite these challenges, Zambia’s capital markets have demonstrated resilience, with notable green bond issuances and the registration of new financial instruments.

“The Lusaka All Share Index (LASI) surged impressively by 14.76%, reflecting positive market sentiment. Market capitalization grew by 10.08%, driven by share price increases, while corporate bonds doubled, mainly due to CEC Renewables’ green bond issuance. However, market trading volumes declined, indicating reduced activity and liquidity.”

On a positive note, savings growth increased by 10.08%, propelled by share price rises and CEC Renewables’ green bond issuance. Secondary market trading increased, enhancing transparency through daily updates on the SEC website. Additionally, the Commission addressed six complaints, resolving one and investigating five.

Chitalu highlighted the Commission’s initiatives to promote green finance, including leading the National Financial Inclusion Strategy (NFIS) Capital Markets, Environmental, Social, and Governance Working Group. The Capital Markets Master Plan (CMMP) activities will commence with orientation meetings in Q2 2024.

Financial Literacy Week (FLW) aims to improve financial literacy, focusing on safe money management practices. Lastly, the SEC facilitates capacity building in the securities industry through partnerships.

Despite declining equity market trading volumes signaling reduced activity and liquidity, Chitalu acknowledged ongoing challenges such as inflation and liquidity constraints, emphasizing collaborative efforts needed for sustained stability and advancement of Zambia’s financial markets.

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