By Alex Mwaba Chishya, Lusaka, 12 March 2024 – Over the last five years, the Lusaka Securities Exchange (LuSE) has stood out due to its impressive growth, becoming the best performing stock market in Africa in 2021 with a notable 93.2% gain. This streak of success continued into 2022, with LuSE leading again by providing a 12% return to its investors in dollar terms. Such consistent achievements underline the dynamic expansion of Zambia’s financial market, supported by the country’s stable political environment.
LuSE has seen its listings grow from 22 in 2010 to 25 by April 2022. This increase is a sign of a diversifying market, offering a wide array of investment options across various sectors from basic materials, financial services, to utilities. This diversification reflects Zambia’s rich and varied economic scenery, presenting numerous opportunities for both local and international investors.
In the area of treasury bills and government bonds, we have seen changes that reflect Zambia’s economic trends. For example, yields on treasury bills have decreased slightly, suggesting that the cost of borrowing for the government may be going down. This is a positive sign, indicating a more stable environment for interest rates.
Interestingly, even after Zambia faced challenges with debt, there is a noticeable increase in investor confidence. This is seen through the slight decrease in bond yields, from 17.50% to 17.00%. Typically, this would mean investors are feeling more positive about the country’s economic stability and its management of debt. It is a complex scenario, though, with various factors at play, including the global hunt for higher yields and the potential for economic recovery and effective debt management within Zambia.
Despite some investor caution, notably after Zambia’s challenges with loan repayments, the picture remains one of cautious optimism. Investors are keeping a close eye on Zambia’s broader economic indicators and challenges. True recovery and long-term stability will depend on the Zambian government’s and the Central Bank’s ability to address core economic issues and adopt wise financial policies.
The corporate scene at LuSE, particularly in the banking and mining sectors, offers a glimpse into Zambia’s economic strengths. For instance, ZANACO leads in transactions and market capitalisation, highlighting the banking sector’s health and critical role in the economy. Similarly, ZCCM-IH’s performance in mining and energy displays sector resilience as well as how local dynamics interact with global commodity trends.
The rise in Foreign Portfolio Investments (FPIs) signals a growing international interest in Zambia, reflecting confidence in the country’s economic prospects. This, alongside the active participation of domestic investors in LuSE, shows a deep-seated belief in Zambia’s financial future, evidenced by significant trading volumes and values.
In sum, a closer look at LuSE offers insights into the buzz of activity across government bonds to corporate manoeuvres, capturing the attention of both local and international investors. With government securities showing signs of stability and corporate sectors brimming with activity, Zambia emerges as an attractive spot for investment. It’s a narrative of optimism and growth, suggesting Zambia as an appealing option for investors aiming to tap into the potential of emerging markets.
