The Eswatini Stock Exchange says the listing of State Owned Enterprises (SOEs) on the Exchange could significantly boost market capitalization and broaden the investor base, especially retail and foreign investors.
The Exchange detailed this in its September 2023, month-end report.
“The government of Eswatini is also encouraged to list strategic State-Owned Enterprises (SOEs) as such listings could offer a potential divestment solution that not only would allow the government to raise funding and harness the value of her SOEs but also reap the benefits for capital markets development,” notes ESE in its report.
The ESE further supports its argument by stating that a World Bank case study (World Bank’s Listing State-Owned Enterprises in Emerging and Developing Economies Report (2021) showed that some of the largest SOE listings allowed local equity markets to grow their market capitalization by up to 170 percent.
Moreover, the Exchange lists other potential benefits that can be experienced following the listing of SOEs.
“SOE listings have attracted a broad shareholder base, sometimes over one million investors, many of whom represent first-time retail investors. At the same time, SOE listings have provided governments with a great opportunity to attract foreign investors.”
But the question remains if that is the only challenge facing the Exchange.
The Financial Services Regulatory Authority (FSRA) in its Quarterly Statistical Bulletin Q1 2023, unearths that the market has limited activity because old investors buy and hold.
The FSRA asserts that this hogging blocks or prevents any new investors from purchasing, as old investors do not sell. The financial regulator posits that the issue is not necessarily liquidity.
According to the ESE month-end report, the local equity market’s capitalization increased by 1.21% from SZL4,403,722,628 at the end of August 2023 to SZL4,456,906,342 at the end of September 2023.
The market capitalization increased due to the price movements of Inala Capital and Greystone Partners. Year-on-year, the market capitalization realized a 2.5% gain from SZL4,348,262,427 in September 2022 to SZL4,456,906,342 at the end of September 2023.
Another major development that took place on the exchange this month is the Exchange Market Committee granting approval for the listing of 50 million ordinary shares at 100 cents each, amounting to E50 million issued capital of Nkonyeni Pre-Cast Limited (NPC).
“Trading of NPC shares is expected before the end of October 2023. The Exchange implores other local companies to open their doors to EmaSwati to be co-owners in their businesses as this translates to economic empowerment and financial inclusion of the general populace,” notes the ESE.