THE Lusaka Stock Exchange (LuSe) market capitalisation for the first quarter of 2014 has increased to K52 billion representing the growth of 17 per cent compared to what was recorded over the same period in 2013.
And the Security Exchange Commission (SEC) has expressed concern that major advisors on the transactions happening in the country’s economy have to come from outside the country.
Addressing journalists at a joint media briefing with SEC, LuSE chief executive officer Brian Tembo said the LuSE All-Share Index (LASI) closed at 5,814.49 points which was 40 per cent up from the same period in 2013.
Mr Tembo said the movement in the LASI could be attributed to the increase in the number of shares in some stocks due to rights issues and the capital gains recorded in some stocks.
“Volume of shares traded was significantly higher in the first quarter of 2014 than that of the previous period due to rights issue by the Copperbelt Energy Corporation (CEC) Plc.
“The markets also experienced an increase in the shares held in our CSD in some companies like, Cavmont Capital Holding Plc after the leftover chunk of shares was brought to the market and taken up by institutional investors,” Mr Tembo said.
The trade turnover, like the volume, increased significantly by 64 .14 per cent compared to the same period for the previous year.
He said the market was steadily becoming information sensitive, with investors responding to corporate announcements and the general performance of the economy.
The secondary market activity in Government bonds showed losses in the period under review, while a decrease of 49 per cent was recorded in the value of bonds activity for the quarter under review.
At the same briefing SEC chief executive officer Wala Chabala said the commission was concerned in that for transactions happening in the economy, advisors of such transactions came from outside the country.
“You find that major advisors anyway, come from outside and they come to levy quite a sizeable fees on these transactions, sometimes to an extent of more than US$2.6 million on one transaction.
“And these are fees that end up having to leave the country and this is not a good development for our country,” Dr Chabala said.
Dr Chabala said this demonstrated lack of capacity in terms of local advisors that the country have, adding that this could also demonstrate apathy on the side of Zambian issuers to use local advisors.
He said there was need to move towards localising advisory activities in the capital market and retaining the fees in the economy.
“If we gonna have such fees leaving the country for these transaction, we will be putting pressure on the exchange rate as well,” he said.
He said if issues were invested in the stock exchange, they are somewhat protected against changes in the inflation which has risen to 7.8 per cent, in that they would not lose out in terms of value.
Dr Chabala also said there were a number of issues that needed to be addressed if the capital markets were to assume significant role in the economy.