THE asset management sector's exposure to the property market increased by 16,06 percentage points to 50,33% as at September 30 2023, as investors divested in equities and long-term investment strategies to tame inflationary pressures, a new report shows.
In its latest capital market quarterly report, the Securities and Exchange Commission of Zimbabwe (SecZim) said the sector’s exposure to the stock market further declined to 36,36% from 44,61% recorded in June 2023.
“There was a marked increase in property investments from 34,27% recorded in June 2023 to 50,33% reported as at 30 September 2023,” the report reads in part.
“Money market investments fell from 10,59% recorded as at 30 June 2023 to 3,59% reported as at 30 September 2023. Increase in exposure to property is largely attributable to divestment in equities and long-term investment strategies to tame inflationary pressures.
“Appetite for long term investments is also evident in the steady rise of private equity from 4,13% in June 2023 to 5,57% recorded in the quarter under review. Cash or call deposits, bonds, and other investments all account for the remaining 4,15% investment exposures for the asset management industry.”
In the period under review, the funds under management (FUM) stood at ZW$12,71 trillion, representing a decrease of 11,60% compared to the figure reported in the previous quarter.
The industry FUM average for the period under review stood at ZW$427 billion. The report said the United States dollar denominated FUM stood at US$21,6 million.
Financial analyst Ranga Makwata recently told businessdigest that in the past few months, stock markets have generally been offering less attractive prospects for investors for a number of reasons, chief among them regulatory pressures.
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He cited the example of increases in capital gains tax and increases in interest rates, which resulted in investors moving away from the stock markets to the money market.
“They had to sell their assets to try and reduce their borrowings. And also there is also an increase in other sectors. So there is a diversification at play.”
Makwata said investors are trying to diversify their assets away from stock markets, favouring assets such as property.
The report shows that the country’s capital market sector remained resilient as at September 30 2023, as measured by securities market intermediaries’ ability to maintain adequate capital and fair profitability.
During the third quarter, one dealing firm was licensed, bringing the number of licensed dealing firms to 22.
Total turnover for both the equities and exchange traded funds markets on the Zimbabwe Stock Exchange amounted to ZW$172,78 billion.
FINSEC recorded a total of ZW$1,26 billion worth of trades.
The Victoria Falls Stock Exchange recorded US$6,48 million from 3 617 trades that went through the foreign currency denominated exchange during the quarter ending September 30 2023.
In the period under review, the number of active registered collective investment schemes stood at 52 from the 51 recorded in the previous quarter. The number of unitholders increased to 82 795 from 81 699 recorded in the previous quarter.
Collective investment schemes’ (CIS) funds under management declined by 3% to ZW$338 billion.
“The degeneration is attributable to the losses in securities held for investments given CIS exposure to equities. The total funds under management for the five CIS funds which are denominated in USD amounted to US$21,5 million which is a 33% increase from US$14,3 million recorded in June 2023,” it said.
The increase, according to the report, is attributable to the addition of a new USD denominated CIS fund (Eagle REIT Fund managed by Fidelity Asset Management) and strong performance of the other USD denominated funds.
