As the Zimbabwe Stock Exchange becomes a popular destination for short and long term investment of funds we can expect many more people who are unfamiliar with the exchange and stock market investing to want to get in on the fun. It’s also reasonable to expect people to have questions and concerns about the workings of the system. Here we have compiled some of the frequently asked questions and provide answers to them.
How can I buy shares on the ZSE?
Is there a minimum investment amount for the ZSE?
Currently, the minimum purchase amount is ZWL$100 and 100 shares (whichever is higher) this is before fees. When going through brokers they may have deposit amount minimums but the purchase minimums remain the same.
How do I make money on the ZSE?
There are two ways to make money in stock market investments. Firstly capital gains, this happens when the value of the shares increases. It’s important to note that you can only access these gains when you sell the shares. Secondly dividends, these are profit payouts made by companies to shareholders and are paid out immediately on the specified dates.
Can I lose money on the ZSE?
Yes. Money placed on the stock exchange is at risk. What you buy are shares of a company and the valuation can change based on conditions. Sometimes up, sometimes down.
How active do I have to be when investing on the ZSE?
This is difficult to answer for everyone and depends on your goals and approach. It is feasible to buy and hold for years just as it is feasible to trade daily. Choose which works best for you.
What risks should I know about on the ZSE?
There are risks in individual companies known as business risks which are specific to the companies you invest in. There are wider risks such as general economic risks which can affect the entire exchange but these are less likely to threaten your investment.
How soon do I start making money on the ZSE?
It is feasible for an investment to gain value in hours or minutes. While this does happen a lot, stock markets tend to favour people with longer horizons. You’re likely to get tangible returns in 6 months and longer horizons if your investments perform well.
How good are ZSE returns considering inflation levels?
While Zimbabwe has been beleaguered by inflation which has cast doubt over the gains made on the ZSE you will see that many shares surpassed inflation. In fact, only 8 companies failed to do so in 2020.
Is my investment protected on the ZSE protected?
The ZSE was closed in 2020, what happens if that happens again?
In addition to being closed in 2020, the ZSE was also closed in 2008 for largely the same reasons. In both cases, the authorities reopened the ZSE after concluding their investigations.
We currently invest in Zimbabwean dollars what happens if we dollarise?
On the question of dollarisation, we can only look to the past. When we dollarised in 2009 the ZSE had been closed for months. When the Zimbabwean dollar was demonetised the decision was taken to reset all share values and restart. Shares were then allowed to find new US dollar values in the market.
Any recommended reading/resources?
What do I benefit by being an investor?
As detailed before the benefits of ordinary shareholders come in capital gain and dividends.
Do I get share certificates?
Zimbabwe now uses a Central Securities Depository system which holds all share certificates for you. Details for your CSD account can be retrieved through the platform you used to purchase.
Are there terms I need to know?
While the world of finance is filled with a lot of jargon many of the terms are quite simple and you get used to them with everyday use. For the most part, a dictionary can help with terms you do not understand.
Important things to remember? Security key etc
The most important to remember would your CSD account number but it is not absolutely essential as the CSD account is registered with your ID number.
What is the ZSE Old Mutual Top 10 ETF?
The ETF (Exchange-Traded Fund) is a fund established in our case by Old Mutual that invests in the top 10 companies in Zimbabwe based on size. It allows those with small amounts of money to benefit from small shares of ownership in the biggest counters in Zimbabwe. You can read this ETF explainer article for further information.
Which ZSE companies should I buy?
This answer changes from time to time and the best thing to do is to keep abreast with our ZSE coverage to know what is happening and consult an investment professional.
How much money can I make on the ZSE?
The answer depends on how much you are willing to put in and your behaviour. For the sake of context ZWL$100 invested in CBZ on 2 January 2020 would’ve been worth ZWL$12093.37 (12093.37% gain) on 31 December 2020. Conversely, ZWL$100 (0% gain)invested in Zeco on 2 January 2020 would be worth ZWL$100 on 31 December 2020. Remember that inflation for the year was roughly 400%.
What are indices and how are they useful?
Indices are averages of a grouping of shares. The grouping can be based on size, industry or many other factors. To understand fully you can read more here.