How To Invest in the Zimbabwe Stock Exchange in 6 steps
1. Pick a StockBroker
StockBrokers are the authorised intermediaries to trade financial assets on the Zimbabwe Stock Exchange.
2. Open a Trading Account with the StockBroker
The only requirement is to be of legal age and have a residence in Zimbabwe. The StockBroker will provide you with access to their investment platforms, allowing you to send purchase and sale orders to the Zimbabwe Stock Exchange's central system.
3. Choose the Asset in which to invest
The investor has to decide whether to invest in shares, sovereign bonds or corporate bonds.
4. After making a decision, send a Buy order via the StockBroker
Submitting a purchase order for a financial asset. It is possible to set a limit price or a market price of the selected asset.
5. The transaction is completed once buying and selling prices match
When the bidding price of an asset equals the asking price, the trade is executed. The StockBrokers makes the transaction payment at the Stock Exchange in your name, and they deliver the transaction amount to the buyer/seller StockBroker. You become the legal owner of the asset.
6. The StockBroker issues the transaction notification and charges their fees
There is no fixed fee, which means that when choosing a StockBroker to invest in the Zimbabwe Stock Exchange, it is essential to choose the one that better adapts to the investor's situation.
How does the Zimbabwe Stock Exchange work?
What is the Stock Exchange?
Based in Harare, the Zimbabwe Stock Exchange was founded in 1894 and is its leading Stock Exchange. It has evolved to be one of the longest established capital raising platforms in Africa.
In short, the stock exchange is the institution that facilitates the negotiation of financial instruments in Zimbabwe. Supply of financial instruments such as stocks, bonds, currencies, and the demand for these instruments (i.e. investors) interact here.
The Stock Exchange holds daily "Trading Sessions", for which it provides the physical, technological, human and operational means that allow efficient communication between Brokers, Issuers and Investors. It only operates in Zimbabwean Dollars and is regulated by the Securities and Exchange Commission of Zimbabwe.
What is a Securities Issuer?
Issuers of securities are companies that seek to grow through raising capital at the Zimbabwe Stock Exchange. These companies raise capital by issuing debt (bonds) or capital (shares). Issuers of securities may be government-controlled entities or private companies, but no matter who owns the company, it is the issuer who backs the investment.
For example, if you invested in bonds from a private company, the company will be required to pay the principal and interests to the bond investors.
By May 2020, the following companies listed their shares at the Stock Exchange (grouped by sector):
Consumer Discretionary: African Sun Limited, Axia Corporation Limited, Edgars Stores Limited, National Tyre Services Limited, Padenga Holdings Limited, Powerspeed Electrical Limited, Rainbow Tourism Group Debentures, Rainbow Tourism Group Limited, Simbisa Brands Limited, Truworths Limited.
Consumer Staples: African Distillers Limited, Ariston Holdings Limited, British American Tobacco Zimbabwe Limited, CFI Holdings Limited, Dairibord Holdings Limited, Delta Corporation Limited, Hippo Valley Estates Limited, Innscor Africa Limited, Medtech Holdings Limited, Meikles Limited, National Foods Holdings Limited, OK Zimbabwe Limited, Seed Co International Limited, Seed Co Limited, Star Africa Corp Limited, TSL Limited.
Financials: CBZ Holdings Limited, FBC Holdings Limited, Fidelity Life Assurance Limited, First Capital Bank Limited, First Mutual Holdings Limited, GetBucks: Medium Term Note, GetBucks MicroFinance Bank Limited, NMBZ Holdings Limited, Old Mutual Limited, ZB Financial Holdings Limited, Zimre Holdings Limited.
ICT: Cassava SmarTech Zimbabwe Limited, Econet Wireless Zimbabwe Limited, Zimbabwe Newspapers (1980) Limited.
Industrials: Cafca Limited, General Beltings Holdings Limited, Masimba Holdings Limited, Nampak Zimbabwe Limited, Unifreight Africa Limited, Zeco Holdings Limited, Zimplow Holdings Limited.
Materials: Amalgamated Regional Trading (ART) Holdings Limited, Bindura Nickel Corporation Limited, Border Timbers Limited, Cottco Holdings Limited, Falcon Gold Zimbabwe Limited, Hwange Colliery Company Limited, Lafarge Cement Zimbabwe Limited, Pretoria Portland Cement Limited, Proplastics Limited, RioZim Limited, Turnall Holdings Limited, Willdale Limited.
Real Estate: Dawn Properties Limited, First Mutual Properties, Mashonaland Holdings Limited, Zimre Property Investments Limited, Total general.
How is a Trade completed in the Stock Exchange?
A trade, or, in other words, the investment flow of any financial instrument, could be summarised as follows:
1. Sellers (supply) offer to sell a financial instrument at a price, for example, a bond issued by African Distillers Ltd. Sellers aim to make this price as high as possible (Price 1).
2. Investors (demand) who wish to buy the bond, make an offer for a price. They want this price to be as low as possible (Price 2). Then, Price 1 is more significant than Price 2.
3. Buyers interact with sellers until they are at the point where Price 1 equals Price 2. When this occurs, the financial transaction is completed, and the bond is exchanged between the seller and the buyer. For this interaction to occur, a Broker is needed: A company that has the role of mediation between sellers and buyers, ordering prices and quantities of financial instruments. Below we explain the services that these companies provide.
What is a StockBroker?
Transactions of financial assets can only be completed through a company that works as an intermediary between investors and sellers. These intermediaries are known as StockBrokers.
Through complex technological tools, brokers manage transactions between investors, ordering the purchase and sale orders of financial assets by price and by order of arrival. By performing this service, they obtain a commission when, for example, executing buying a share.
They are, then, market intermediaries, companies in which buyers and sellers interact and come together to buy stocks or bonds at the negotiated price.
To invest in the Zimbabwe Stock Exchange, an investor needs to open an account with a local StockBroker. Find here the list of approved companies.
International Brokers operate easy-to-use apps that allow you to buy and trade financial assets (like US Stocks, Commodities, Indices) on any device.
Investing in International Financial Assets [From Zimbabwe]
As we have mentioned many times in this guide, trading of financial assets must be done through a Broker. In the case that you decide to open an account with a broker who trades in the Zimbabwe Stock Exchange, you will be allowed to trade locally listed assets only.
If you, in turn, decide to open an account with an international Broker, you may invest in countless global assets. In other words, you can invest in international financial assets such as stocks listed on the New York Stock Exchange from Zimbabwe through an international Broker.
The job of an international Broker is to connect their clients with international Stock Exchanges. In other words, if a client intends to buy Apple shares (which are listed in New York), the broker buys it for the client and deposits it in the client's trading account. In general, almost all significant Brokers provide access to Exchanges from the United States, Canada, the UK, Japan, Switzerland and Europe.
Opening an account with an international broker is usually an online process, and you can operate in the global financial market from your phone in just a few days.
Best International StockBrokers available in Zimbabwe
This article will help you start investing, from the minimum amount of money required to open an account to some ideas to consider in your portfolio.