Capital Market Performance in Quarter 2-2023: Resilience Amid Economic Challenges

Delivered by Mr. Philip K Chitalu


The Securities and Exchange Commission (SEC) of Zambia, established under the Securities Act Cap 41 of 2016, plays a pivotal role in supervising and developing the Zambian Capital Markets. Our mandate includes overseeing financial intermediaries, authorizing financial instruments, and fostering the orderly growth and integrity of the Zambian capital markets.

Capital Market Performance

The second quarter of 2023 posed a test of resilience for the securities industry, coinciding with delays in Zambia’s debt restructuring negotiations with creditors. These challenges impacted investor sentiments and the expected flow of funds into the market. Despite these hurdles, the securities industry has demonstrated remarkable resilience, with a strong performance in Q2-2023.

In June, the Kwacha appreciated by 16.8% against the US dollar, reaching K17.59, primarily due to improved foreign exchange supply from corporate tax obligations. The IMF Staff-Level Agreement on the first review of the Enhanced Credit Facility also bolstered market sentiments and contributed to the Kwacha’s appreciation.

However, this currency appreciation had mixed effects on foreign investors, with foreign portfolio investments on the Lusaka Securities Exchange (LuSE) showing inflows of $5,274 and outflows of -$282,099, resulting in a net negative position of -$276,824. The higher yields on government securities at the beginning of the quarter affected the corporate debt market’s performance, making it costly for issuers to raise debt securities compared to government bonds and other money market assets.

Despite these challenges, an analysis of the capital markets as of 30th June 2023, compared to 31st March 2023, reveals a 2.49% increase in total savings in the capital markets.

Market Capitalization

The total market capitalization (including Shoprite Holdings) grew by approximately 2.33% to K76,794 billion as of 30th June 2023, relative to the figure on 31st March 2023. This reflects a market capitalization as a percentage of GDP at 17.32% at the end of June. Key drivers of this growth included share price increases in listed companies like PUMA, Airtel Zambia, Standard Chartered Bank Zambia, Zambia National Commercial Bank, Chilanga Cement, British American Tobacco Zambia, BATA shoe company Zambia, and Zambia Metal Fabricators.

Assets Under Management

Assets under Management (AUM) for Collective Investment Schemes (CIS) grew by 0.40%, increasing from K1.866 billion in March 2023 to K1.874 billion in June 2023. The total number of investors in June 2023 reached 411,211, marking a significant 28.60% increase from 319,762 in March 2023.

Equity Market Performance

The Lusaka All Share Index (LASI) increased by 5.11% as of 30th June 2023, compared to 31st March 2023. The index experienced steady growth throughout the quarter, driven by gains in stock prices of companies such as PUMA, Airtel Zambia, ZANACO, BATZ, BATA, and ZAMEFA. Retail investors and pension funds played a significant role in driving trades, with average portfolios gaining 6.82% of their value in the second quarter.

Trading Volumes and Complaints

Trading volumes on the equity markets decreased by an average of -96.98% between March and June 2023 due to reduced activity. The Commission received two complaints during the second quarter of 2023, and efforts to address them are ongoing.

Corporate Bonds

The corporate bond market saw significant growth, with total outstanding corporate bonds increasing to K627 million in Q2 2023, up from K450 million in Q1 2023, reflecting a 39% increase. This growth was attributed to new bond issuances under existing note programs. Corporate bonds provide an alternative source of long-term funding for issuers and offer stability for investors.

Government Bonds and Yields

Government bond yield rates in the primary market experienced increases for certain tenors in Q2 2023. Notably, the 2-year bond increased from 17.5% to 18%, and the 7-year bond increased from 15.4% to 25.9%. The average yields for GRZ bonds on the primary market remained stable for other tenors.

Government Bonds Secondary Market

The secondary market for government bonds recorded 1,906 trades in Q2 2023, a 3% increase from the previous quarter. The nominal value of bonds traded was K25.3 billion, marking a 14% increase. The quarterly bond turnover ratio increased from 9% to 10%.

Capital Markets Master Plan (CMMP)

The CMMP, launched on 23rd February 2023, continues to progress. Stakeholder engagements, including capital market operators’ involvement and formal Memoranda of Understanding with cooperating partners, are helping implement this plan effectively.

Sandbox and Sub-National Bonds Workshop

The first cohort of the regulatory sandbox concluded, with three of the four innovations completing their testing phase. A one-and-a-half-day workshop on revenue bonds for municipalities and sub-national entities raised awareness about financing alternatives for local authorities.

World Investor Week

SEC Zambia will participate in the seventh annual World Investor Week (WIW) from 2nd to 8th October 2023, focusing on Investor Resilience, Crypto Assets, and Sustainable Finance. WIW aims to enhance investor education and protection.

Green and Sustainable Finance Activities

To position Zambia as a global green investment hub, the Commission is actively promoting sustainability, including green bonds. Initiatives include forming a coordinating unit, stakeholder engagements, and mainstreaming green finance within the broader financial sector.


Despite challenges, the securities industry demonstrated resilience and growth in Q2-2023. The Commission remains committed to market development, financial inclusion, and sustainability. The public and media are encouraged to participate in upcoming events and visit our website for further information.

Leave a Reply

Your email address will not be published. Required fields are marked *