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Oliver Kazunga Senior Business Reporter
THE demutualisation of the Zimbabwe Stock Exchange (ZSE) is a giant step towards improving the performance of the bourse and its capitalisation, economic analysts have said.The demutualisation process has been on the cards for several years until last week when the ZSE announced the stock exchange was now owned by private investors.

Under the demutualised ZSE, the government will reduce its shareholding from 32 percent to 16 percent while stockbrokers will reduce their stake from 68 percent to 34 percent.

The remaining 50 percent will be shared among private financial institutions and individuals.
Institutions such as banks, insurance companies and pension funds will get 20 percent while individuals will be allocated 30 percent.

“On one end, demutualisation of the ZSE entails  that the stock exchange will improve its performance.  It can now link with other stock exchanges electronically as the electronic trading requires more instruments compared to the manual system,” said Taonaziso Chowa, a lecturer at the National University of Science and Technology’s department of insurance and actuarial science.

“As private investors come in it means the ZSE capitalisation will improve, which is good for the local stock market in attracting foreign investors and more buyers. At the moment, one of the challenges facing the ZSE is liquidity and through the attraction of more foreign investors and buyers, liquidity supply will eventually improve going forward.”

Finance and Economic Development Minister Patrick Chinamasa is on record as saying demutualisation of the stock exchange would result in the ZSE being exposed to good corporate governance, enhanced efficiency and transparency associated with publicly listed firms.

Another economic commentator, Wendy Mpofu  said demutualisation allows the exchange to be listed on its own floor where investors would have the opportunity of investing in the self-regulatory organisation.

“Demutualisation allows the ZSE to be competitive and to take up investments that could enhance returns for shareholders,” she added.

Peter Mhaka, an economic analyst said the demutualisation of the ZSE would see it linking with other bourses through the electronic platform.

Demutualisation has become a global  phenomenon.

Exchanges that have demutualised include the Singapore Stock Exchange, Japan’s Nikkei, New York’s NASDAQ, Kenya and Johannesburg Stock Exchange, among others.