• Depreciation of the local currency in the first quarter of 2023 affected foreign investor’s positions.
• Lusaka All Share Index went up 6.82 percent.
• SEC continues to look forward to the country’s debut green bond issuance.
Securities and Exchange Commission (SEC) has disclosed that an analysis of the Capital Market as of 31st March 2023 against 1st January 2023 shows the total savings in the capital markets increased by 3.04%.
SEC Chief Executive Officer Philip Chitalu during a media brief of Capital Market for first Quarter of 2023 says Zambia’s capital market in quarter 1 of 2023 was resilient with global equity markets also proving the same in face of weaker economic forecasts and baking tensions.
“The global economy is in a moderate slow down, with global financial markets being subjected to financial shocks by tensions in the banking sectors of the US and Europe in final weeks of quarter 1 of 2023” he said.
Mr. Chitalu noted delays in concluding Zambia’s bet restructuring with creditors affected flow of funds and investors’ perceptions on the country’s credit ratings.
He added that depreciation of the local currency in the first quarter of 2023 affected foreign investor’s positions while higher yields on government securities affected performance of the corporate debt market.
He said this made the performance of corporate debt market “expensive for issuers to issue debt securities.”
Mr. Chitalu added that at the same time this made shares unattractive compared to government paper and other money market shares.
The SEC CEO disclosed that total market capitalization increased by about 3 percent to K75, 049 billion as of 31st March 2023 relative to the figure on 1st January 2023, Collective Schemes Assets under management grew 10.43% from 1.690 billion in December 2022 to K1.866 billion as at March.
He noted that Lusaka All Share Index including Shoprite holding in the period under review went up 6.82 percent as of 31st March 2023 relative to 31st December 2022 and trading volumes on equity markets went up by an average of 572 percent between January and March.
He added that “In Q1 2023, the corporate bond maturities amounted to K53.9 Million which was largely made up of a K50 Million maturity by one issuer.”
Further, Mr. Chitalu indicated that during the period under review in relation to quarter 1 of 2022, the yield rates for government bonds in the primary market increased for all tenures except the 10 year bond that remained unchanged at 17.5% for the 2 year bond, 22% for the 3year bond, 24% for the 5 year bond, 25.4% for the 10 year bond and 27.5% for the 15 year bond.
“In terms of quarter 1, 2023 secondary bond market activities, the market from government bonds recorded 1,859 trades which is 22% higher in relation to the previous quarter” Mr. Chitalu said.
He indicated that the nominal value for bonds that traded, Q1 2023 recorded K28.2 Billion which is 50% higher than Q4 2022 where nominal value for bonds that traded was K18.9 billion.
He further elaborated that the total market value for bond trades in the secondary market during quarter 1of 2023 was K15.2 billion, which is 25% higher than in last quarter of 2022.
Mr. Chitalu further noted that SEC continues to look forward to the country’s debut green bond issuance and subsequent issuances.
He said in 2023, the Commission will among others focus on establishment of Green Finance Unit to champion its commitment to position Zambia as a green investment hub.
Mr. Chitalu revealed that “The Commission had been engaged in numerous activities aimed at raising awareness and sensitization related to green bonds and their role as a plausible option for financing green projects.”
He indicated that the engagements cuts across various stakeholders including policy makers, potential issuers and industry practitioners.