Login

Lost your password?

Sign Up

Register

Login

Login

Lost your password?

Register

Monday, May 23, 2022
  • Home
  • Banking
  • Industry & Trade
  • Investing
  • Money Deals
  • Regional Markets
  • Tech & Biz
  • Countries
  • Opinion

Africa's
Investment
Gateway

The Exchange
  • Login
  • Register
Subscribe
This Month's Edition
Previous Editions
  • Home
  • Banking
  • Industry & Trade
  • Investing
  • Money Deals
  • Regional Markets
  • Tech & Biz
  • Countries
  • Opinion
No Result
View All Result
The Exchange
  • Home
  • Banking
  • Industry & Trade
  • Investing
  • Money Deals
  • Regional Markets
  • Tech & Biz
  • Countries
  • Opinion
No Result
View All Result
The Exchange
LOGIN
Zimbabwe stock exchange reduces circuit breakers (Photo/ ZSE)

Zimbabwe stock exchange reduces circuit breakers (Photo/ ZSE)

Market volatility triggers change of circuit breakers in Zimbabwe’s ZSE

Hyperinflation pushes ZSE to reduce circuit breakers

by Albert Nangara
May 10, 2022
in Investing
0
Share on FacebookShare on LinkedIn
  • Percentage thresholds to trigger a circuit breaker for all counters trading above ZWL 1 reduced from ±20% to ±15%
  • Circuit breaker for all stocks with a market price below ZWL1 reduced from 100% to 20%
  • Market-wide trading halt duration of 30 minutes for index movement of ±10% per trading session, effective from May 3, 2022

Zimbabwe has been here before, and the current sequence of events reads like a script from the same old playbook.

The Zimbabwe Stock Exchange announced through a press release that the circuit breaker bands will be reduced from +/-20% to +/-15% for counters priced over $1 and +/-100% to +/-20% for those priced below $1. They also instituted a trading halt where the All Share Index moves more than 10% (either way) in one trading session. What it simply means is that the ZSE now has much more sensitive circuit breakers than before.

Previously, the ZSE had a 20% circuit breaker limiting intra-day gains and declines to contain crashes and speculative jumps.

In a statement last month, ZSE Chief Executive Officer, Jason Bgoni said, “The Zimbabwe Stock Exchange Limited (ZSE) would like to notify all stakeholders of the following operational changes with effect from 3rd of May 2022.”

Bgoni said that the changes had been necessitated by a benchmarking exercise undertaken by the ZSE against other comparable stock exchanges in the region and beyond. He further said that the ZSE will continue to review its operations in line with market developments.

Circuit breakers are measures implemented by exchanges when they consider price movements to be overly volatile. They can take the form of a trading suspension or limiting buying and selling of securities within a specific price range. Circuit breakers are a fail-safe measure aimed at curbing panic selling on stock exchanges.

Jurisdictions and stock exchanges have their own rules for what circuit breakers entail when they kick in, and for how long they are in place. Circuit breakers are triggered based on slightly different parameters on various exchanges, with trading suspended anywhere between 5 minutes – as is the case on the Hong Kong exchange – or an entire day.

New York Stock Exchange President Stacey Cunningham told CNBC that circuit breakers are a precautionary measure that can slow down for a minute.

The circuit breakers “are designed to slow trading down for a few minutes, to give investors the ability to understand what’s happening in the market, consume the information and make decisions based on market conditions,” she said.

A circuit breaker functions in the trading world the same way it does for electrical circuits in a home. When things get overloaded, it kicks in and shuts down the circuit.

According to NASDAQ, they can be halted for extreme movement in either direction, “limit up” or “limit down.” Circuit breakers for the stock market were first put in place following the massive market crash in 1987 when the Dow lost 22.6% in one day.

Saying events are happening again in almost perfect congruence to the hyperinflation period is a very strong indictment

According to the Zimbabwe Mail, as a rule of thumb, whenever the Zimbabwe Stock Exchange goes into the supernova as if on steroids, all is not well in the motherland. The local bourse has been rising, like pension funds, insurance companies, and retail investors alike, scurrying toward equities as a hedge against both inflation and the potential risk of their bank balances, commonly referred to as “RTGS”, becoming worthless. This past week saw the stock exchange rising to its highest levels ever, achieving a market capitalization of $3 trillion.

Between, 2003-2005, the Zimbabwe Stock Exchange was a speculator’s paradise. Over the past two years, we have seen more and more people take part in the buying and selling of shares. Unfortunately, this increase in participation paired with the sharp rise in black market rates has resulted in market volatility.

These numbers, much like the ones witnessed last week when in a panic gripped buying spree, share prices soared to astronomical levels, leading circuit breaker regulations to be enforced as several stocks breached the 20% single daily gain limit. Again, just like during the Zimbabwean dollar stock market mirage, much of this value, not backed by fundamentals will disappear as the market self-corrects at some point.

market volatility triggers in Zimbabwe
ZANU PF spokesperson and investment analyst Ambassador Christopher Mutsvangwa said abuse of stock exchange is unacceptable (Photo/ Bulawayo24)

Meanwhile, ZANU PF spokesperson and investment analyst Ambassador Christopher Mutsvangwa said currency volatility is being caused by rogue companies who are abusing the local bourse. He made these statements during a virtual discussion in the Southern Africa Political Economy Series on the ‘difference between rhetoric and reality, a debate on the future of the Zim dollar, the soaring prices, rising inflation, and the economic situation in general.’

“the biggest corruption in this country has come from abuse of the Zimbabwe Stock Exchange where some firms are taking hard currency from Zimbabwe and taking it to the West,” he said.

“We cannot have a situation where a stock exchange is performing better than the economy of that country. If that happens in other countries, including the United States, it is simply closed,” he added.

In 2020, Zimbabweans were banned from legally transferring capital out of the country by buying dual-listed shares on the ZSE for local currency and selling these for forex on other exchanges where the same shares are bought and sold.

Read: ZSE: Two more indices to enhance tracking of market performance

Tags: Circuit breakershyperinflationmarket perfomanceNASDAQstock markettrading curbZimbabwe stock exchangeZSE

STATE OF ECONOMY - GET THE REPORT

ASSESSING EAST AFRICA

Loading...

Albert Nangara

Albert is a Chemical Technologist and Author. He is passionate about mining, stock market investing, Fintech and Edutech.

Related Posts

Six African nations launch the Africa Green Hydrogen Alliance. www.theexchange.africa
Investing

Renewable energy: Six African nations launch the Africa Green Hydrogen Alliance

May 20, 2022
South Africa retailer Pick n Pay to cut US$187 million in costs in 3 years www.theexchange.africa
Investing

South Africa retailer Pick n Pay to cut US$187 million in costs in 3 years

May 20, 2022
Kenya and Tanzania economic gains from friendly diplomatic relations. www.theexchange.africa
Investing

Kenya and Tanzania: Economic gains from ‘relaxed’ diplomatic stance

May 19, 2022
Next Post
Is bitcoin the missing piece to the success of AfCFTA? www.theexchange.africa

AfCFTA and Bitcoin: Is the crypto key to trade agreement's success?

www.theexchange.africa

Kenya: Business conditions worsen as customer demand declines

www.theexchange.africa

Technology: Liquid Intelligent acquires Israeli tech firm to expand its digital solutions offering

Please login to join discussion




This months edition

May Edition

Features

EdTech role in African development
Tech & Business

EdTech’s role in African development

by Kanyali Muthui
May 16, 2022
0

Due to the pandemic, the topic of innovation in education has never been more crucial.  While most developed countries moved...

Read more
investment in African science and technology
Tech & Business

Investing in Africa’s science and technology: Where are we now?

by Kanyali Muthui
May 16, 2022
0

The continent’s digital revolution can largely be driven by building the necessary skills for the short- and long-term future, and...

Read more
Fintech revolution in Africa
Tech & Business

The Fintech Revolution in Africa’s FX Markets

by Kanyali Muthui
May 11, 2022
0

With over 548 million registered mobile money users in sub-Saharan Africa, increased internet access and readily available mobile money solutions,...

Read more
www.theexchange.africa
Countries

US – Nigeria Trade Relations: An Overview

by Wanjiku Njugunah
May 2, 2022
0

Nigeria is currently the United States' 54th largest goods trading partner, with US$7.8 billion in total goods trade as of...

Read more
A previous conference for African Insurtech sector. The Insurtech boom is deepening insurance uptake in Africa. www.theexchange.africa
Tech & Business

Insurtech boom deepening the uptake of insurance in Africa

by june njoroge
May 2, 2022
0

Kenya-based Pula is another distinguished insurtech making waves in the continent. It provides small scale farmers with agricultural insurance and...

Read more

News

Banking
Industry & Trade
Investing
Money Deals
Regional Markets
Tech & Biz
Opinion

Countries

Kenya
Tanzania
Uganda
Burundi
Rwanda
Southern Africa
Ethiopia

More

My Account
Contact us
Advertise
About us
Help Center

Subscribers Center

E-paper
Premium Stories
Education Rates
Corporate Subscriptions
Weekely Newsletter

  • My account
  • About us
  • Advertise
  • Contact
  • Privacy Policy
  • Refund Policy – The Exchange
  • Sitemap

No Result
View All Result
  • Home
  • Banking
  • Industry & Trade
  • Investing
  • Money Deals
  • Regional Markets
  • Tech & Biz
  • Countries
  • Opinion
  • Login
  • Sign Up
  • Cart

© 2021 The Exchange - Powered by MediapixManaged by Supported by Digihandler,

Welcome Back!

Login to your account below

Forgotten Password? Sign Up

Create New Account!

Fill the forms below to register

All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In