The Victoria Falls Stock Exchange (VFEX) registered a significant 117% surge in turnover to US$58.51 million in the first quarter of 2025, underpinned by rising demand for US dollar-denominated assets and a wave of special negotiated trades, according to the latest capital markets update by the Securities and Exchange Commission of Zimbabwe (SecZim).
The VFEX, a wholly owned subsidiary of the Zimbabwe Stock Exchange (ZSE), has rapidly evolved into a sought-after investment destination, benefiting from investor-friendly incentives and its strategic role in the operationalisation of Zimbabwe's Offshore Financial Services Centre (OFSC) within the Victoria Falls Special Economic Zone.
Most of the companies listed on VFEX have migrated from the ZSE in recent years, citing the ability to raise capital in hard currency as a key attraction.
In contrast to VFEX's positive momentum, trading activity on the ZSE remained subdued in Q1 2025, with turnover falling by 6% to US$35.80 million (ZiG951 million). This was accompanied by a 5.63% dip in market capitalisation, from US$3.87 billion in Q4 2024 to US$3.65 billion at the end of March 2025.
"The subdued trading on the ZSE led to a corresponding drop in the ZSE All Share Index, which fell by 5.67% to close at 205.25 points, down from 217.58 points at the end of December 2024," noted SecZim in its Q1 2025 Capital Markets Newsletter.
Meanwhile, the VFEX All Share Index grew by 5.99% over the same period, rising from 104.09 points to 110.32 points, underscoring the growing appeal of the USD-denominated bourse amid ongoing economic volatility.
Total funds under management (FUM) across the capital markets stood at ZiG93.35 billion by the end of March 2025, representing a 3.55% increase from the previous quarter. Notably, US dollar-denominated FUM rose by 10.17% to US$2.06 billion, accounting for 61.31% of the total portfolio, with the remaining 38.69% held in local currency.
ZiG-denominated FUM, however, declined by 8.84% to ZiG38.18 billion, down from ZiG41.89 billion in Q4 2024, reflecting investor preference for USD-based assets amid inflation and exchange rate instability.
The newsletter further revealed shifts in investment allocations, with property investments growing to 48.45% of the portfolio, up from 47%, while money market allocations increased from 6.97% to 8.85%. Exposure to unquoted equities rose slightly to 4.50%, and bond allocations grew to 6.62%.
Total trade settlements conducted through Chengetedzai Depository Company (CDC) and the ZSE Depository reached ZiG975.26 million in Q1, reflecting continued transactional activity despite broader market pressures.
Market analysts say the contrasting performances of the VFEX and ZSE illustrate a structural shift in investor behaviour, as economic conditions and global market forces prompt a migration towards secure, hard currency-denominated platforms.
As Zimbabwe's capital markets continue to evolve, VFEX is positioning itself as a cornerstone of the country's investment ecosystem, offering a haven for both domestic and international investors seeking stability and returns in a volatile environment.
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