‘Capital market growth still possible’

BUUMBA CHIMBULU writes THE capital market in Zambia has the potential to excel above average despite the current economic challenges, says Chief Executive Officer of the Securities and Exchange Commission (SEC), Philip Chitalu. Mr Chitalu expressed confidence that the country’s capital market could grow if the exchange rate and inflation were closely monitored. He was speaking recently when he features on the Stanbic Bank Zambia’s Anakazi Banking Online Conversation. “We really have to watch our inflation; we watch the performance of the money markets in terms of returns on bond, and of course, we have to watch the exchange rate; it has to be stable to encourage people to invest for the long term,” he said. Mr Chitalu stressed the importance of a stable currency to the performance of the capital market. “The stability of the exchange rate is very, very key to the performance of capital markets, because if I bring US$1 million into the economy, how much do I take out in 12 months? If the exchange rate has moved against me, and if I did not hedge, then I would have lost out,” he said. High inflation, Mr Chitalu emphasised, could negatively impact the capital market as it would discourage long-term investment. Stanbic Bank Zambia Regional Debt Capital Markets Manager, Pascal Mwila, called for introduction of a capital market index that would measure economic performance in Zambia. Mr Mwila stressed the need for a country to have a capital market that was robust enough for the index to be used as a barometer for the economy “If you have a healthy and functioning capital market, it becomes another barometer for the economy, which can be used to quote whether the economy is performing well or performing badly. “And so, it is very, very important that we have a capital market that is robust enough for the index to be used as a barometer for the economy,” he said. The Sun