We have extracted the Chairman’s Statement from the 2018 annual report for Securities and Exchange Commission Zimbabwe:

3.1 Operating Environment

The year was yet another unpredictable one for Zimbabwe’s capital market with mounting pressures from adverse local, regional and international economic developments. On the bright side it was progressive in that the market maintained its thrust towards recognition as a notable investment Desdemona. The Commission’s mandate is continuously evolving shaped by an ever‑changing operating environment to which we must adapt.

The fact that Zimbabwe does not exist in isolation clearly means that one cannot detach the market from the widespread turmoil on international financial markets. Escalate global trade tension and retaliatory measures by major trading partners during the period under review has the potential to squeeze aggregate demand, income and capital inflows. The economic slowdown in China during the year turned out to be the slowest growth in three decades. If untamed, the slowdown can generate adverse spill over effects into Zimbabwe through lower than projected commodity prices thereby exacerbate economic imbalances. The sluggish growth and uncertain policy direction in the country’s major trading partners do not auger well for the local market. Such developments are prone together global financial conditions and capital flow reversals.

Zimbabwe’s prospects of an economic rebound therefore remain under threat for myriad for economic adversities for both within and beyond borders.The commission believes that the prevailing liquidity crisis is a manifestation of the structural deficiencies and distortions in the economy which have resultant curtailed market activity and subscription levels in most recapitalization efforts. Sustainable implementation of key structural economic reforms is critical in swaying investor perception and confidence towards broad based economic growth and development.

Like every other sector, the capital market has not been spared from the ongoing economic ordeal. Despite some improved confidence that was witnessed with the onset of the new dispensation comprising a leaner Cabinet with some technocrats of high repute, post‑electron violence witnessed on 1 August obviously put a dent to potential international re engagement. The general macroeconomic environment worsened following Government’s stance to maintain the USD to bond note parity status with no respite to the foreign currency crunch. Repatriation of stock market proceeds by foreign investors conned unabated. Average foreign participation remained generally depressed at 34% throughout the year largely comprised of recycled funds. SECZ applauds the RBZ for spearheading the establishment of a USD5 million facility that is meant to ring fence all foreign portfolio investments. Meanwhile, the Central Bank is working on modalities to operational the facility. Annual inflation shot up to an all‑me high of 42.1% since polarization thereby reviving memories of the much feared 2008 hyperinflation. Inflation broke through the SADC regional macroeconomic convergence target of 3%. Industry players resorted to a costlier black market for foreign currency which came at a premium of at least 250%.

Notwithstanding underlying challenges, market participation remained cave albeit confined to defensive stocks amid heightened uncertainty. Listing is generally a function of the underlying macroeconomic environment. There were three delistings, one new listing and a total of $22.5 million in capital raised on the market during the period under review. With ongoing market development initiatives, SECZ expects more quality and bigger listing on the stock exchanges. The market closed the year with a YoY return of 103% in sharp contrast to its regional peers most of which registered losses over the same period. However, obviously more sell needs to be done.

At regulatory level, the market sell has limited and outdated support subsidiary legislation for the Commission to effectively execute its mandate. The cost of doing business on Zimbabwe’s capital market is sell low considering that the local market remains more expensive than its regional peers simply by comparing total trading costs. A reduction in trading costs would improve the competitiveness of the market within the region. SECZ implores Government to ensure an enabling investment environment through enactment of legislation aligned to best practice.

At issuer level, the Commission is sell baling limited information disclosure and weak corporate governance standards by some listed companies. With globalization, international capital tends to flow towards good governed investment destinations. Unsurprisingly SECZ had run‑ins with some listed companies that had been at the center of some public squabbles reported in media during the year. Adequate, equitable and melt disclosure of material information is critical for informed decision making, investor protection, market integrity and growth. The expected new set of ZSE listing rules coupled with the recently published National Code on Corporate Governance should go a long way in promoting good governance and ethical standards.

A lot of companies are sell running on outdated, unsustainable business models and obsolete equipment yet the operating environment has changed. In this regard, our industry is bound to remain uncompleted given globalization where capital now flows towards profitable investment destinations. Issuers should realize that borrowed capital is expensive and should be accessed only if there is capacity to generate enough income to meet future repayments. There is need to adapt to the changing operating environment.

The market is sell characterised by shareholder apathy hence the voice of the minority is sell not being heard as the market sell lacks cave shareholder participation. It’s high me investors get to know and understand their rights and responsibilities. Investors have a right to adequate and melt provision of material information about companies they are invested in. They have the right to question decisions by company management and bring them to task on issues that mare. Boards and shareholders need to be more intrusive and probe management on all major strategic decisions for openness and transparency. All too open the secrecy surrounding how companies are being run has resulted in shareholders only getting to know of their company problems at the point of