“The market capitalisation is obviously made up of the prices of all the shares on the market, and where it increases is mostly due to upsurge in prices of some of those shares, and also upturn in some of the number of shares on the market,” Wala Chabala, a CEO at Zambian Securities and Exchange Commission told CNBC Africa.
“We’ve seen tremendous increases in Investrust Bank Plc, Standard Chartered Plc and Zambeef Plc over the period that we’re looking at.”
Market turnover for the first half however dropped by 55.73 per cent to 104.04 Zambian kwacha in the first half of the year, and volumes of shares transacted down 76.89 per cent in the same period.
The decrease in volumes is due to a number of markets structural changes in terms of consolidations because of a recent rebase of the currency, and other consolidations due to entities in the process of trying to meet the recapitalisation changes from the Bank of Zambia.
“What we probably don’t see in the capital markets in Zambia is the reflection of the overall makeup and performance of the economy, so we see GDP growing in the 7 to 10 per cent sort of bracket but we don’t see that reflected on the market,” Chabala explained.
“We see a very diversified economy in terms of the makeup of the different sectors to the GDP, we don’t see that on the capital markets.”
A lack of knowledge on how capital markets work has been a deterrent for a number of local companies wanting to list on the Lusaka Stock Exchange. The shallow depth of capital penetration in the markets also adds to the slow pickup in companies listing on the local bourse.
“Most of these entities don’t understand that if they can borrow from the bank, they can also borrow from the capital markets. If they borrowed from the capital markets, their debt structure will be probably a lot more amenable to what they’re trying to do with their businesses,” said Chabala.