Stock losses wipe out ZWL$4.6 trillion

LIVINGSTONE MARUFU

 

The value of stocks on the Zimbabwe Stock Exchange (ZSE) fell to ZWL$10.71 trillion this week from ZWL$15.3 trillion in June, causing investors to lose about ZWL$4.6 trillion over the past four months, Business Times can report.

The stock market suffered during the reviewed period due to the falling weight of mega cap quality stocks, also known as blue chip counters.

The decline is largely attributed to actions taken by the authorities to rein in inflation that had become out of control.

ZSE, the once lucrative investment platform for  companies seeking cheap funding, is now vulnerable due to equity exposure.

Its no longer able to   serve that purpose  of helping  businesses raise  cheap funding.

“The plunge was bound to happen due to several factors that include the  Zimbabwe dollar liquidity squeeze, tight monetary and fiscal policy stances and  uncertainty caused by elections (held on August 23 and 24).

“There was very limited  Zimbabwe dollar in the market hence the market capitalisation continued to go down in line with the exchange rate where the local currency was gaining against the United States dollar.

“Also before August 24, the investors did not want to invest due to high uncertainty associated with the elections,” Marks & Associates insights and research director Batanai Matsika told Business Times.

However, after the harmonised elections, stock prices began to rise.

The trajectory is anticipated to last through the year’s end.

“The liquidity has improved a bit since the  holding of the harmonised elections  as the exchange rate started to move as the Zimbabwe dollar devalued. The current bullish sentiments which started post August elections is expected till the year end unless another cocktail of measures are instituted to arrest the volatile situation,”Matsika said.

He added: “Now that the elections are over, investors   have started to participate on the bourse as there is no longer uncertainty on the market.”

The ZSE reported a total market turnover of ZWL$171bn  in the third quarter of this year, a 27% increase from the previous quarter and in comparison to the same period last year, the market turnover recorded a 418% jump from ZWL$33bn.

In a third quarter market report,  the bourse said the ZSE All Share Index lost 26% from Q2 2023 to Q3 2023 to close at 126,642.42 points.

“The ZSE All Share Index which is the measure of the overall market performance was down by 26% in Q3 2023 to close at 126,642.42 points. The ZSE top 10 Index which is the blue-chip index on the ZSE retreated by 39% to close the quarter at 56,560.21 points in Q3 2023.

“The ZSE ICT Index recorded the highest loss for Q3 2023, registering a 41% drop to close at 78,092.73 points,” ZSE said.

The bourse said the  top five traded companies during the period under review were First Mutual (ZWL$52.7bn), Delta (ZWL$14.8bn), Econet (ZWL$5.8bn), Meikles  (ZWL$3.5bn)  and OK Zimbabwe (ZWL$3bn).

The report said the top five traded counters contributed 87.5% of Q3 2023 turnover.

The ZSE Exchange Traded Funds (ETF) was up by 11% in Q3 2023 to close at 1,596.31 points.

The total value traded on the ETF board was ZWL$84.8m and the total number of ETF units that exchanged hands in Q3 2023 was 7.5m.

The market capitalisation for the ETFs was ZWL$39bn at the end of Q3 2023.

 

 

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