Old Mutual ETF now highest dematerialized counter

Old Mutual ETF now highest dematerialized counter

Staff Reporter


THE Old Mutual Zimbabwe Stock Exchange Top Ten Index Exchange Traded Fund (ETF) that was listed on the local bourse in January 2021, is now the highest dematerialized counter at 100 percent.

Chengetedzai Depository Company (CDC), in a Central Securities Depository (CSD) update for February 2021, said the average dematerialization penetration ratio (Demat Ratio) across all counters remained at 51,27 percent.

Dematerialization is a process through which physical securities such as share certificates and other documents are converted into electronic format and held in a Demat Account.

The ratio, which had largely remained static at 45 percent for more than two years, improved to current level after CDC embarked on various initiatives to encourage dematerialization of shares by investors who are yet to deposit them onto the central securities depository.

Proplastics has over the years been the lead company with the highest demat ratio. As at February 2021, the company’s demat ratio is now second to Old Mutual ETF at 98 percent.

The Old Mutual Zimbabwe ZSE Top 10 Exchange Traded Fund (ETF) is the country’s first ETF, which is a good, inexpensive way to get exposure to the stock market.

According to the latest update from Chengetedzai, only 10 companies have dematerialisation penetration ratios of over 90 percent. These are Masimba Holdings, Dawn, ART, ZHL, Seed Co limited, Ok Zimbabwe, BNC, RTG and FMP.

According to Campbell Musiwa, the CDC chief executive, getting to full dematerialisation will result in a lower settlement risk, as well as less costs of servicing shareholders by listed companies.

He said other counters have to be persuaded to engage on dematerialisation.

“All counters are on-boarded but the demat is a process as some still remain materialized. If you look at the Old Mutual ETF you have 100 % demat because from the start they insisted on demat.  Others have to be persuaded.” he said.

However, in Zimbabwe there is no legislation at the moment that compels investors to hold securities in electronic form.

The February trading update shows that in the month of February 2021, a total of 129 deposits were processed by CDC compared to 170 in the month of January 2021. This brought the cumulative number of deposits since going live to 89,182.