THE Zimbabwe Stock Exchange (ZSE) has lost about $2 billion of total market value over the last two and half weeks, as investors took profits after stocks had a brief period of sustained gains in September.
The domestic stock market had risen in just over a week of consecutive gains between September 17 and September 25 to reach a post dollarisation high of $31,88 billion while the ultimate performance indicator, the main ZSE industrial index reached a record high of 809,67.
This came as annual inflation, which raced from 5,39 percent in September last year to 175,6 percent by June 2019, showed no signs of relenting until Treasury suspended its publication in June.
Publication of the annual rate of inflation will remain on hold until February next year when a full cycle of same currency based indices will have been complete to allow like-for-like inflation trends comparison after Treasury reintroduced the domestic currency in February this year.
Zimbabwe had used a basket of currencies dominated by the US dollar since February 2009 after dumping, then, its inflation ravaged domestic currency following a decade of economic meltdown.
Prior to the bullish run in September, the ZSE benchmark industrial index had registered gradual decline between July 13 and September 16 before the steep gains started, as investors sought to hedge against rising inflation, which hit 175,6 percent at the last official count in July.
Year to date, the ZSE has seen the highest gains in pharmaceutical products maker Medtech $0,72 (3 500 percent), hoteliers African Sun $0,50.25 (402 percent) and RTG $0,11.5 (381 percent), brick maker Willdale $0,4.60 (359 percent) and financial services group CBZ $0,66 (325 percent).
With the money market offering negative returns amid galloping inflation, investors appear to have found a safe haven in stocks, grossly undervalued in highly inflationary conditions, in terms of investment options in Zimbabwe.
Meanwhile, for the week ending October 11, 2019 the stock market’s total market capitalisation rose 0,99 percent to close at $30,15 billion, representing year to date gain of 54,49 percent.
The all share index remained stable, ending the week at 233,30, while the Top 10 Index was down 1,65 percent to 215,18. The Industrial Index retreated 0,64 percent last week to 772,90, whilst the Mining Index fell 7,84 percent to end the week perched at 278,28.
Trading in heavyweights was weak last week as Econet $1,75, Cassava $1,55 and Delta $3,74 recorded losses of 4,38 percent, 3,29 percent and 2,36 percent, respectively and the week’s top gains were realized in MedTech, Dawn and Dairibord $0,48, up 38,46 percent, 35 percent and 23,47 percent, respectively.
The week’s biggest losses were registered in cement maker PPC, down 20,67 percent, nickel extractor Bindura, which dropped 18,75 percent and agriculture implements maker Zimplow Holdings, down 7,93 percent.
Volumes traded totaled 34,40 million shares and averaged 6,88 million shares per day. Weekly turnover totaled $40,18 million. Average daily value traded was $8,04 million for the week.
Activity was highest in Delta, Old Mutual, and Econet, contributing 20,14 percent, 17,31 percent and 9,34 percent, respectively. thezimmail