ZSE gains $5bn market cap

More than $5 billion was added to the Zimbabwe Stock Exchange (ZSE) total market capitalisation in September amid frenzied buying.

Total market capitalisation rose 78 percent month on month to $12,35 billion in the month under review, three times as big as the country’s annual spending and almost 75 percent of Zimbabwe’s gross domestic production.

On a regional scale, the ZSE remains the top performer on a year to date basis after adding 189 percent of value ahead of Nigeria at 31 percent, Kenya at 21 percent, Mauritius at 23 percent and South Africa’s JSE at 5 percent.

Average market turnover for the month jumped 560 percent to $89,81 million sustained by increased demand in stocks on positive investor sentiment.

The mainstream Industrials Index was 78,02 percent higher to close the month at 418 as investors cheer continued in the month on speculative buying.

Month-on-month, total volume traded also rose 128 percent to 264 million. The most significant contributions to total value traded were the market’s blue chips, Delta, Simbisa and Padenga that all contributed 20 percent, 14 percent and 10 percent respectively.

Insurance giant, Old Mutual and telecoms firm Econet both contributed 8,7 percent and 8,6 percent respectively.

Headlining the bulls for the month were wines and spirits maker, Afdis that rose 153 percent to close the month at 170 cents while CBZ Holdings added 149 percent to 24,90 cents.

In the half year to June 30 2017, CBZ remained the largest bank by assets and deposits $1,8 billion of the banking sector’s total deposits. By market share, CBZ takes up 27 percent of the banking sector deposits.

Agriculture concern Ariston was up 145 percent to 2,70 cents while Willdale rose 125 percent to 0,79 percent.

Hospitality group African Sun also made it into the top five risers, adding 125 percent to 4,50 cents.

On the downside were First Mutual Holdings Limited and Rainbow Tourism Group that fell by 17 percent to 9,50 cents and 9 percent to 1 cent.

The Minings Index rose 65 percent to 122 on gains in Bindura which closed the month 104 percent up to 5 cents while Falgold was up 66 percent to 1 cent.

Hwange and Riozim rose 43 percent to 3,74 cents and 53 to $1 respectively.

Market watchers say stocks have overheated as current prices are not being supported by any key economic fundamentals.

“We believe that the uptick in performance of some counters has already been absorbed at current prices and we have started seeing some profit taking from some investors at current levels. However, given lack of alternative investment classes offering superior returns, we anticipate that the market will continue to trend upwards during the month of October,” said brokerage firm IH Securities.

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  • Chatambudza

    The extra $5 billion added to the ZSE are of course Zimbabwe dollars locked within local financial systems, with little relevance to genuine United States dollar values traded freely internationally. Many people are familiar with the term fungible, and the fact that certain shares such as Old Mutual are traded on multiple Stock Exchanges across the world, for Old Mutual they are listed in Zimbabwe (ZSE), London (LSE) and Johannesburg (JSE). Being fungible they trade for virtually the same value across the world, which is true for Old Mutual Shares in London and Johannesburg which have the same US$ value, however Old Mutual shares purchased in Zimbabwe on the ZSE trade for almost 3 times as much in local dollars (Bond Notes?) as in other counties, making a mockery of Dr Mangudya’s 1:1 BN to US$ parity. Giving reasons behind the Bull Run on the ZSE as investors attempt to convert Zimbabwe’s rapidly worthless local currency into other tangible assets.