ZSE volumes slump

By Ndakaziva Majaka

Share volumes traded on the Zimbabwe Stock Exchange (ZSE) went down 24,5 percent in the month of May to 129,1 million from the 170,8 million that exchanged hands prior comparable period, official data shows.

In its May report, the central bank highlighted that while the bourse’s market capitalisation had surged 140,4 percent to $11,3 billion from $4,7 billion recorded during the same period last year, shares traded were down.

Equities analysts who spoke to The Financial Gazette said the main reason for this was that stocks were trading at higher prices in May compared to the same period this year.

This comes as United Kingdom-based equities analysis group, Exotix Capital, recently said investors remained in a catch 22 as local equities were too expensive for new money while existing investors are unable to repatriate funds to their respective homes.

Pointing out that investment into Zimbabwe’s equities was redundant until repatriation flows smoothly again as publicly-listed equities enjoy a premium acting as substitute for scarce cash, the analysts at Exotix said local stocks remained overvalued.

“… The Old Mutual Implied Rate (OMIR) premium (the difference between the share price of the Harare listing of Old Mutual and the fully fungible London one) has increased to 106 percent (compared with 474 percent immediately before Mugabe’s fall in November 2017.

“Repatriation requires a rebuilding of US$ reserves and liquidity, which, in turn, requires re-engagement with international finance,” Exotix Capital analyst Christopher Dielmann said in a note on the country.

In May, the market strengthened gaining 8,10 percent as the Industrial Index was up 8,14 percent to 357,59 buoyed by gains in Innscor, Econet and Delta of 2,48 percent, 5,72 percent and 21,29 percent, respectively.

The Mining Index gained 21,77 percent to 151,53 on the back of gains in Bindura and RioZim of 71,19 percent and 10,68 percent, respectively while the All Share Index edged up 9,72 percent to 108,30 points as the Top 10 Index also strengthened 10,30 percent to 111,20 points.

Turnover decreased 11,18 percent to $62,06 million, with average daily trades of $2,96 million realised during the month with the most significant contributions to total value traded being Econet, Old Mutual and Delta contributing 32 percent, 20 percent and 16 percent respectively.

The bourse has been on a recovery path, following a self-correction phase that came after massive bulls recorded last year as institutional investors sought the security of stocks in an uncertain political climate.

Meanwhile, other significant top gainers in the month were African Sun, up 61,73 percent, Padenga, up 45,05 percent, SeedCo, up 41,03 percent and Ariston, up 40,00 percent. Losses were however observed in Proplastics, down 98,93 percent, Willdale, down 18,24 percent, Mashonaland, down 13,88 percent, Hippo, down 9,71 percent, and ZHL, down 7,60 percent.

— The Financial Gazette