PHILLIMON MHLANGA
The Zimbabwe Stock Exchange (ZSE) has swung back into positive territory from last month’s rout, rallying to fresh record highs, resulting in investors gaining a hefty ZWL$150bn from their investment.
The market left behind last month’s jitters, with the capitalisation, which represents investors’ worth on the stock market rebounding to ZWL$940bn this month, brushing aside the downturn that trimmed about ZWL$8bn off the ZSE to ZWL$792.3bln in August.
This means the bulls outnumbered the bears, amid renewed positive market sentiments in September.
Multiple investment analysts told Business Times this week that the upside as the market continued to roar back from last month was largely due to some positive corporate earnings, a widespread bull run on large caps and availability of liquidity.
Business Times can report that the small cap stocks also rallied but with less force.
The bourse registered its worst performance in nine months in August as fears grew that the economic crisis largely due to Covid-19 lockdown measures could lead to a contagion.
The downside saw ZSE closing August in the red at 6,652.31 points.
The stock market shed about ZWL$8bn in August as market capitalisation dropped to ZWL$792.3bn from ZWL$800.4bn reported in July, the first time the bourse closed lower than the previous month this year.
This was largely also due to diminishing demand for stocks.
The penny stocks lost the most in August. The Small caps shed 5.42% in August to close at 224 123.94 points.
The ZSE benchmark All Share, in August, dropped 0.98% to close the month at 6 652.31 points. The Top 10 dropped by 1.19% to 3 595.05 points.
Mining index dropped 0.22% to 6 115.85 points. However, the stock exchange rebounded from the downside, with almost all major sectors advancing this month.
One of the major stock market gauges, the All Share index rebounded to record a high of 7 866.84 points so far in September after rallying 6.68%.
The top 10 Index rose 8.55% to close at 4 488.02 points while small caps gained 2.38% to close at 229 647.05 points.
Analysts, this week told Business Times that investors have been bullish on large cap stocks such as Delta Corporation, Innscor, Econet Wireless and Meikles Limited, among others.
“The sharp bounce has been led by big caps, which helped push the stock market to lofty levels,” an investment analyst, who preferred anonymity, told Business Times this week.
Zimbabwe’s largest brewer, Delta Corporation, shot 33% to ZWL$112.45 while Simbisa Brands rose to ZWL$58.52 from ZWL$49.50.
Cash-rich conglomerate Innscor Africa and Meikles Limited surged 48% to ZWL$135.11 and 28% to ZWL$112.53 respectively.
Seed Co Limited gained 10% to close at ZWL$85.84 while and Econet Wireless Zimbabwe added 3% to ZWL$38.77.
Another investment analyst said: “Investors are seeing better that expected corporate results for the first six months of the year, published in the past four weeks, giving signs that local companies listed on the stock exchange, which have been teetering on the brink of collapse due to adverse effects of Covid-19 pandemic, are bouncing back.
Although Covid-19 remains a big threat to companies, the availability of liquidity in the market, also resulted in a bull run on the market.”
Turnover stood at about ZWL$1bn. This is however lower than ZWL$3.4bn invested in August. Investors continued with their exit from the ZSE, cashing out shares worth ZWL$65m this month, while foreign buys stood at about ZWL$2m.
Analysts said the foreign investors were selling off on fears that local companies would struggle to recover from the negative effects of Covid-19 and the prevailing harsh economic conditions.
What has also triggered the massive sell off is the government’s policy inconsistencies, which has resulted in foreign investors struggling to repatriate dividends to their country of origin.
