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Stock Market Financing Increased By More Than 1000% to 333.2B Meticals in 2023

Stock Market Financing Increased By More Than 1000% to 333.2B Meticals in 2023

Financing through the Mozambique Stock Exchange (BVM) has grown by more than 1000% since 2016, reaching 333.2 billion meticals in 2023.

“This is one of the most important stock market indicators, because it measures the capacity to finance the economy, and it has seen a greater evolution over time, particularly since the end of 2016 until 2023,” said the chairman of the board of directors (PCA) of the BVM, Salim Valá.

Quoted by Lusa, he explained that in 2016, the volume of financing totalled 28.9 billion meticals, so that by 2023 it had grown to more than 1000%, making it the highest performance indicator in BVM’s 25 years of operation.

According to the explanation, this indicator measures the ‘stock’ of active debt, such as Treasury Bonds, Corporate Bonds and Commercial Paper, plus equity financing, usually through share sales or subscriptions, and can also be segmented by public and private sector financing.

“The type of entities that are financed by the stock exchange is directly dependent on the type of security, whether it’s Treasury Bonds for the exclusive financing of the State or Corporate Bonds and Commercial Paper, which can correspond to both public and private entities, as can share capital operations,” he clarified.

Valá revealed that in the last five years BVM has issued 13 Corporate Bonds with a total value of 4.5 billion meticals.

In the same period, commercial paper issues totalled 3 billion meticals, 2.2% by companies and 97.8% by financial institutions, while share capital operations were carried out exclusively by three companies, for a total value of 11.4 billion meticals.

The PCA recalled that financing through the capital market “depends on macroeconomic factors”, in particular the level of interest rates, the inflation rate, compulsory reserves, exchange rates, the savings rate, the growth rate of the economy, among others.

“In Mozambique, the level of interest rates is considered high, even compared to countries in the sub-Saharan African region, which has greatly conditioned companies’ ability to resort to credit at an affordable cost,” he pointed out.

He also acknowledged that his organisation has given importance to financial education and is therefore “implementing a robust and comprehensive” programme to boost companies and investors.

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“Over time, the private sector has financed itself on the capital market, particularly in terms of short-term financing through the issue of commercial paper, which has been practically stagnant since 2017,” he concluded.

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