The Sunday Mail
Enacy Mapakame
Investors traded stocks worth $100 billion in May alone as they hedged against inflation and the Covid-19 fallout.
Stocks doubled as a result.
The pandemic has caused a global market rout, with investors losing billions in stock markets, commodities markets and even crypto-currency markets due to uncertainty. Markets, however, believe that the rout has bottomed out as conditions for market stabilisation and revival are beginning to take hold.
Risk assets are forecast to trade higher during the second quarter of the year.
The Zimbabwe Stock Exchange (ZSE)’s market value recorded its highest monthly gain in a decade this month after adding 125 percent to $142 billion as at close of trade on Thursday.
Heavy cap counters were the major value drivers for the month. Investors piled into equities to hedge against rising inflation. Annual inflation for March increased to 676 percent amid a spike in food prices due to demand caused by the Covid-19-induced lockdown. The ZSE has become a speculators’ market, with no real fundamentals driving investors’ appetite. Trading updates from corporates are already showing contraction across sectors as the effects of the pandemic take their toll.
Delta, the biggest counter by market value, surged 161 percent to $15,32. The beverages giant’s parent company, AB InBev, recorded a 5,8 drop in revenues to US$11 million and a 9,3 percent decline in volumes during the first three months of the year compared to the same period in the prior year. Telecoms giant Econet rose 113 percent to $7,06, while Cassava put on 96 percent to $6,36 owing to its cash generating business and increased relevance in the digital space due the coronavirus.
The cigarette maker recorded a 10 percent increase in volumes during the first quarter of 2020 on improved business efficiencies. Financial services giant Old Mutual rose 102 percent to $85.
Overall, volumes for the year to March eased 20 percent, while Zimbabwean volumes came off by about 75 percent in April.
On the resources side, Bindura surged 120 percent to $1,20 from 44 cents, while RioZim was 28 percent firmer at $7,80. Without any concrete solutions to tame inflationary pressures, the market is expected to continue on a bull run as investors hedge against the effects of inflation.
Treasury and the Reserve Bank of Zimbabwe have, however, indicated some monetary and fiscal measures will be introduced soon to cushion consumers from escalating prices of basic food items.
Various measures are being introduced to stop illegal transactions on electronic platforms.
