Why Savvy Investors Are Looking To The Lusaka Securities Exchange

Posted on October 20, 2025
Business
By Excel Magazine Team
185 Views

By Mahongo C. Chilembo

The market capitalization of the African stock market is projected to reach USD1.42 trillion by the end of 2025, with a projected compound annual growth rate of 5.99% by 2026. This is being driven by investor interest and increased business activity in fintech, mining, energy and consumer consumption.

Zambia’s stock market, the Lusaka Securities Exchange (LuSE), has emerged as a strong performer, ranking as the 8th best performing bourse on the continent. The LuSE All Share Index (LASI) has risen by 88% between January 2024 and July 2025 (the Period). This makes it a serious consideration for anyone looking to grow their wealth, both in Zambia or abroad.

However, it’s key to understand whether this growth is superficial or if investors are making actual real returns. The answer lies in understanding the difference between simple gains and real capital appreciation, and how the market’s top stocks have acted as a buffer against both inflation and currency risk for existing investors.

The Power of Real Capital Appreciation

Often when considering an investment’s return, focus is on the simple percentage gain, such as a stock price rising from ZMW10.00 to ZMW20.00. This is called a nominal return or capital gains.

However, inflation is a significant factor to always consider, given the cost of goods is constantly rising. Whilst the initial ZMW10.00 may have grown, the real change in its purchasing power must be determined. That is, was the equity investment worth it or could the money have performed better elsewhere?

This is where real capital appreciation comes in. This measures how much an investment has grown in real terms after accounting for inflation. If a share price increases by 100%, and inflation by 13% during the same period, the real gain is 77%. Understanding this concept is key for making smart investments. The goal is to acquire investments rising in value at a faster pace than inflation.

The LuSE has had a real capital appreciation value of 57.1% over the period, outpacing inflation which rose by 19.9% (change in the value of the CPI). This means money invested in January 2024 could then buy 57.1% more in terms of goods in July 2025. This demonstrates that investing in high-performing stocks is an effective strategy to not only beat inflation but to get significantly ahead of it.

A good case in point is British American Tobacco Zambia (BATZ). From January 2024 to July 2025, BATZ experienced increase in price of ZMW2.00 to ZMW7.00, which is seemingly minimal but is a 264.10% rise. For perspective, if ZMW20,000.00 was initially invested, as of July 2025 it was worth ZMW70,000.00.

During the same period, the Consumer Price Index (CPI) increased by 19.9%, thus the real return on the BATZ stock was 203.7%.

Currency Risk Considerations

Investors often worry about their local currency losing value against foreign currencies like the US Dollar. As a buffer, some Zambians have taken to saving money in forex accounts or keeping foreign currencies on hand. This strategy works well to preserve value when the Kwacha is depreciating, however the opposite is true when the Kwacha strengthens.

From January 2024 to July 2025, the Kwacha appreciated against major currencies such as the US Dollar, Great British Pound (GBP), Euro (EURO) and South African Rand (ZAR), with an average nominal appreciation of c. 8.32%. An investor saving in foreign currencies and not actively trading would have lost money when converting it back to Kwacha.

In contrast, the stocks highlighted, LuSE Market capitalisation and the LASI appreciated significantly. This shows that the equities performance was somewhat independent of the Kwacha’s value against other currencies. An investor holding good performing stocks benefited from considerable real gains whilst benefiting from the Kwacha’s strengthening.

The Fundamentals of LuSE’s Top Performers

Typically, investors over the LuSE are not reactive, usually preferring buy and hold over time. Dividend announcements and impressive financials impact the price, but not by recurring significant amounts. One aspect that the retail market has been displaying recently is the “fear of missing out” during this rising market rally.

As such, whilst these stocks do have solid fundamentals which triggered initial increases, there is an element of speculative trading further accelerating price increments.

Top Performing Stocks

#Shoprite Holdings PLC (Shoprite):
Nominal: +446.9% Real: +356.2%
This retail giant is dual listed on the LuSE and the Johannesburg Stock Exchange (JSE). Previously, there had been an arbitrage opportunity between the two exchanges, providing a lucrative opportunity for knowledgeable investors.

As of January 2024, it was priced at ZAR 275.00 on JSE compared to ZMW64.00 over LuSE. This situation has significantly pushed up the price, with investors purchasing above market on LuSE and transferring to the JSE. As of July 2025, the two prices were nearly equal at ZAR265 and ZMW350.

#Copperbelt Energy Corporation Plc (CEC):
Nominal: +226% Real: +172%
The firm has emerged as a standout performer on the LuSE in 2025. CEC underwent a dynamic first half of 2025, building on a record-breaking 2024, multimillion dollar Green Bond and reinforced its leadership in the energy sector in Zambia and the Democratic Republic of Congo (“DRC”).

On 22nd May, 2025, CEC became the first Zambian company to reach a market valuation of USD1 billion, exceeding its total assets (USD857 million). Modest trading activity in the first half of 2025, but following this announcement, since June turnover and volume dramatically spiked to ZMW90 million and 4 million shares, respectively. These volumes signal increased institutional investor confidence and interest, especially given the firm’s recent dividend history.

#ZCCM Investments Holdings (ZCCM-IH):
Nominal: +209.5% Real: +158.2%
ZCCM-IH’s diversified portfolio in copper, gold, and other minerals offers significant opportunities for growth and stability. A necessity given the critical minerals boom, which when coupled with improving financials and active transactions, has inspired investor confidence.

Consequently, early 2025 the stock was in high demand with low supply, providing a chance for shareholders to bid above market and make a profit, driving up the price.

#Metal Fabricators of Zambia PLC (ZAMEFA):
Nominal: +200% Real: +150.2%
ZAMEFA has recorded a sharp and quick rise in price. This is mainly attributable to positive market sentiment among retail traders due to an improvement in financial performance. The half-year 2025 23% revenue increase amidst rising copper prices lead to an 81% increase in profit after tax, a positive signal for future revenues.

#Airtel Networks Zambia PLC (Airtel):
Nominal: +175.7% Real: +129.9%
Airtel’s share price increases are driven by the scarcity of the stock with only 2.14% in free float and consistent dividend payments since 2023. However, Airtel continues to show relatively low trading activity despite its strong share price performance.

Final Thoughts: A Smart Bet for the Future

The LuSE’s recent performance is a clear signal that it is an exciting market with real opportunities.

The incredible gains seen in these stocks have surpassed both inflation and currency movements. These are a culmination of strong corporate performance, investor activity and speculative trading. For investors looking for new avenues to generate significant real returns, it would be worth understanding the dynamics of the stock market.