ZSE retreats in self-correction
OVER $500 billion was wiped off the Zimbabwe Stock Exchange (ZSE) as the market retreated further into the red during the week to Wednesday, March 11, 2022, latest data shows.
Apparently, the market reacted partly to pronouncements by President Mnangagwa on planned Government measures to defend further depreciation of the Zimbabwe dollar and tame rising inflation.
The measures included the suspension of lending by banks, to private sector, public sector and individuals with immediate effect and the increase in capital gains tax to 40 percent on ZSE shares held for less than 270 days and 20 percent for shares held more than 270 days.
Finance and Economic Development Minister Professor Mthuli Ncube said on Wednesday, in an interview with ZTN’s “The Mint Special” programme, that the measures were designed to prick the bubble of speculative currency and equities trading, which has been stocking inflation.
Economist Eddie Cross said the retreat in the ZSE market cap was likely a direct response to measures announced by the Government to deal with malfeasance in the stock and the currency markets. He said the former was the best performing stock exchange in Africa in March, though largely driven by speculative trading.
“I think that is a direct consequence of the measures. I think that people have been looking for a place to put money and the stock market has been one of them (amid inflation surge). The other place has been the US dollar and I think the measures adopted by the President make it much less attractive to put (speculative) money in the stock market.
“I can see two consequences; one is a retreat in the performance of the stock market. Our stock market was the best performing stock market in Africa in March and I think we are gonna see the stock market retreat (in self correction), but at the same time we will see the parallel market rate retreat as well,” he said.
By the end of the week to Wednesday, the market's total value had retreated by 14 percent to $2,99 trillion from $3,4 trillion in the previous week.
The primary indicator, the ZSE All Share Index went down 13 percent to 24 117 points from 27 839 points.
The market's heavies, the ZSE Top 10 Index fell the heaviest after a 15 percent decline to 15 700 points while the ZSE Top 15 fell 14 percent to 17 400.At 41 718 points, the Medium Cap index was 8 percent below prior week level.
The Small Cap index however, recorded marginal gains of 0,19 percent to 579 021 points.
Property firm Mashonaland Holdings was the biggest casualty with a 33 percent decline to $3,66 from $5,52 followed by Axia which gave up 26 percent to settle at $130,16.
Art backtracked 25 percent to $21,58 from $28,80. Telecoms giant, Econet went down 24 percent to $220,33 while EcoCash completed the top five fallers for the week after it decreased by 20 percent to $125,07.
Other losses were seen in FMP, which lost 19 percent to $8,06 while retail giant OK Zimbabwe gave up 15 percent to $49,72.
Further losses were offset by gains in Zimbabwe's largest media group Zimpapers, which put on 19 percent to $5,25 followed by NTS which rose 16 percent to $16,12.
Insurance giant FML added 9 percent to $21,80 while banking group FBC advanced 7 percent to settle at $75,07.
At $26, mining and agriculture implements supplier Zimplow wrapped the week's top five risers with a 6 percent increase to $26.
Other gains were seen in Unifreight which rose 3 percent to $35 while financial services providers FCB and GetBucks rose by 1 percent each to close at $10,28 and $10,61 respectively.
Cables maker, Cafca remained flat as it reported volumes increased by a marginal 2 percent to 1 199 tonnes over prior year comparable period of 1 175 tonnes impacted by delays in getting regulatory approval to extend their barter deal with the Zimbabwe Electricity Transmission and Distribution Company coupled with exchange control delays in getting paid by Malawi customers which further affected export sales.