Bear raid wipes out ZWL$1.6 trillion in two days

PHILLIMON MHLANGA

 

The Zimbabwe Stock Exchange (ZSE) this week experienced a sudden bear rout that wiped more than ZWL$1.6 trillion in market value in just two days, marking a significant and abrupt turnabout for investors  who had seen a record amount of wealth being created from rising stocks since the beginning of this year, Business Times can report.

The deepest slump in years saw corporate equities fell to ZWL$13.7 trillion on Tuesday this week, down fromZWL$15.3 trillion reported on Monday, according to official data obtained from the ZSE.

The loss of stock wealth suffered, if sustained, will be a blow to investors who have been enjoying a bull run since the beginning of the year.

The value of stocks in January stood at ZWL$2.44 trillion and swung to ZWL$15.3 trillion on Monday this week. But, fell to ZWL$13.7 trillion on Tuesday.

Multiple analysts told Business Times that the heavy losses in stock wealth in Zimbabwe was largely in blue chip counters, which are the most valued companies on the ZSE.

The wipeout was attributed to tight monetary policies stance .

All Share Index lost 11 998.84 points to close at 168 653.34 points. Trading in the negative included the country’s biggest brewer, Delta Corporation Limited, which lost ZWL$511.18 to close at ZWL$2 932.64. Also trading in the negative was Meikles Limited and leading mobile telecommunications operator, Econet Wireless Zimbabwe which shed ZWL$304.88 and ZWL$151.85 to close at ZWL$1785.00 and 861.58 respectively.

Another blue chip counter that traded in the negative was Hippo Valley Estates which dropped ZWL483.33 to close at ZWL$2 516.67 while one of the country’s largest financial services providers, CBZ Holdings traded ZWL$54.95 weaker to close at ZWL$3 445.00.

However, FBC Holdings traded in the positive. It added ZWL$107.50 to close at ZWL$824.40 while gold miner, RioZim closed ZWL$55.20 stronger at ZWL$423.20. Proplastics Limited gained ZWL$10.00 to close at ZWL$460.00 while Zimplow Holdings added ZWL$10.00 to close at ZWL$120.00.

“Stocks experienced a bear raid resulting in steep declines. The rapid plunge is raising alarm bells on ZSE with worries that the ZSE may be losing momentum. Blue chip counters accounted for a large portion of the enormous loss in two days. There are indications that the stock market decline will continue,” an investment analyst who requested anonymity told Business Times yesterday.

Another investment analyst who also refused to be named concurred saying: “The economy is battling severe headwinds and the results are reflecting on the stock market.”

It comes at a time when companies are de-listing from the ZSE migrating to the US dollar denominated bourse, the Victoria Falls Stock Exchange, which has remained largely stable as it has not been susceptible to abrupt policy changes and currency volatility.

 

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