IN a bid to improve liquidity in the economy, the Reserve Bank of Zimbabwe has increased the threshold of foreign investors overall ownership on the Zimbabwe Stock Exchange to 49 percent from 40 percent while the single investor limit has been increased to 15 percent from 10 percent.
The central bank will also introduce an open tender system in the trading of Government securities.
According to RBZ governor Dr John Mangudya, the moves along with other measures announced yesterday are all part of efforts to raise fresh capital for economic transformation which subsequently leads to an improved liquidity position.
Presenting the 2016 Monetary Policy Statement yesterday, the central bank chief said that in order to promote portfolio investments by foreign investors on the ZSE, a single investor will now acquire up to 15 percent of listed shares per counter.
Current Exchange Control policy allows a single foreign investor to acquire listed shares on ZSE up to 10 percent per counter.
“The overall objective is to enhance market liquidity,” said Dr Mangudya.
Liquidity on the local bourse has been on a constant decline with most heavyweight counters taking major knocks.
In order to align the Exchange Control policy to the indigenisation framework, foreign investors can now acquire listed shares up to 49 percent per counter from 40 percent while in the same vein full fungibility for selected counters has been increased to 49 percent from 40 percent.
However, prior Exchange Control approval will be required for full fungibility status.
Foreign investors willing to participate in profit sharing model will now be permitted to inject capital into local firms.
The central bank is also in the process of introducing an open tender system in the trading of Government securities.
“This together with planned listing of the securities on the stock exchange shall go a long way in raising fresh capital for economic transformation,” said the central bank governor.
Government is now issuing Treasury Bills to fund recurrent expenditure and to pay off state-owned company debts. The move comes after calls for Government to open the TBs to foreign investors who may want to expose themselves to the risk.
The central bank also raised banks’ nostro limits to 10 percent from 5 percent of the total banks’ total deposits.
Banks were also directed to purchase rands and other currencies in the multi-currency basket from the public at official exchange rate for onward selling to the RBZ.
The Real Time Gross Settlement System platform is being upgraded to handle other currencies.
Each currency would be transacted on its own for effective management of foreign currency risks.