Investor Protection Fund Up 20% In Q2 On Equities Gains

HARARE: The Investor Protection Fund (IPF) grew 19.89% to $ 520.31 million during the quarter to June, 2021 compared to the fund’s value previous quarter on strong performance on the ZSE.

According to the SECZ’s latest quarterly report, the ZSE All-Share-Index closed the quarter at 6,194.88 points up 38.01% from 4,488.78 points reported as at 31 March 2021 and year-to-year increase by 246.32% from 1,788.75 points reported as at 30 June 2020.

Financial Securities Exchange (FINSEC) closed the quarter with a Market Capitalization of $ 3.32 billion up 46.52%, from $ 2.27 billion recorded on 31 March 2021.

The size of the IPF largely depends on the stock market’s performance which constitutes 78% of its investment on the market. Licensed securities traders and dealers collect a levy on buys and sales from the stock market which is remitted to the Securities and Exchanges Commission of Zimbabwe (SECZ) for the administration of the fund.

The IPF was formed in 2009 to compensate investors for losses incurred as a result of a direct financial collapse of a licensed company by the SECZ. This was part of efforts to strengthen confidence in the local equities market for local investors.

As at June 30, the fund investment was distributed as follows, 78.18% in listed equity, 12.01% in direct property, 8.24% in indirect property, 0.99% in cash and other accounts, 0.43% in unlisted equity and 0.15% in the money market.

However, while the sound capitalization of the IPF may be attractive to local investors it has done little to convince foreign investors on the ZSE who largely remain skeptical of local stocks due to uncertainties of the local market and currency. In US-dollar terms, local stocks are perceived to be undervalued hence the confidence deficit.

Moreover, compensation by IPF can only be done via bank transfer in a volatile local currency thus further upsetting foreign investor confidence which has resulted in their aggressive sell-off of stocks this year.

Data from the ZSE, foreign investors net selling stood at $ 5.8 billion between January and June this year against buys totaling $ 1.1 billion.

Meanwhile, Funds Under Management (FUM) for the investment management industry as at 30 June 2021 stood at $ 276.95 billion representing a quarter-on-quarter increase of 41.31% from $ 195.99 billion reported as at 31 March 2021. The industry average for the 19 investment managers stood at $ 13.85 billion.

The funds were invested in the following asset classes: Equities (Quoted and Unquoted), Property, Money Market, Bonds and Cash. The industry’s exposure to the stock markets was 74.83% as at 31 March 2021 up from 70.49% as at 31 March 2021.

“The increase in stock market investments was mainly due to the appreciation of stock prices on the exchange experienced during the period under consideration,” said the report.

During the period, Corporations accounted for 49.55% (ZWL 5.71 billion) of the total shares bought, followed by Pension Funds which accounted for 21.62% (ZWL 2.49 billion). Individual investors accounted for 6.92% (ZWL 797.08 million).

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