The Bank of Mozambique (BM) will, later this month, place Treasury Bills (BT) in a “B” type auction, aimed at non-monetary financial institutions, namely broker-dealer companies, pension fund management companies, investment fund management companies and insurance companies.
In a press release, the WB justifies the decision by complying with Article 5(3)(b) of Notice No 11/GBM/2017 of 31 May – Regulation on the Issue and Trading of Treasury Bills.
It should be noted that the national Securities Market (MVM) has seen an increase in market capitalisation as a result of the dynamics of Treasury bonds.
“The market capitalisation, which is the main indicator of the Mozambican stock market, increased from 102,139 million meticais in December 2019 to 107,862 million meticais in June 2020, constituting a growth of 5.6%, influenced by the dynamics of Treasury bonds”, said the World Bank in its latest financial stability bulletin.
According to the source, this increase in market capitalisation also “signals the increasing weight of the State in the securities segment”.
“This scenario increases the sovereign risk to which the holders of these securities are subject, with particular emphasis on the members of the banking and insurance sectors, also influencing systemic risk and financial stability in general”, the central bank said.
In its analysis, the WB notes that there is a low volume of transactions in the equity and corporate bond segments, with over-studies in the half-year (only 3.8% and 2.6% respectively).
“This suggests that the capital market is still not an alternative for private corporate finance, aggravated by the fact that it has been on a declining trend since June 2019 for corporate bonds. This is also evidenced by the number of instruments quoted by each segment of MVM, where corporate bonds and equities have a relatively low share as compared to Treasury bonds”, the source stresses.
