Stocks notch ZWL$2.71 trillion gain in October

CLOUDINE MATOLA

The value of the Zimbabwe Stock Exchange (ZSE) increased by ZWL$2.71 trillion in October to ZWL$12.58 trillion from ZWL$9.87 trillion at the start of the month, the largest gain in four years, Business Times can report.

This represents a 24% increase, driven by blue chip counters.

With notable gains, the ZSE All Share Index ended the month at 157,083.06 points. Among the blue chip counters trading in the positive were BAT,  the country’s biggest cigarette maker, which  added ZWL$668.03 to  close at ZWL$14873.75 and  leading financial services group, CBZ Holdings Limited  which increased by ZWL$163.33 to  close at ZWL$1968.33. Hippo Valley Estates also closed at ZWL$2000.29 after gaining ZWL$110.23. The biggest milk processor in Zimbabwe, Dairibord Holding Limited, added ZWL$65 to close at ZWL$550.00, while the largest brewer in Zimbabwe, Delta Corporation, was up ZWL$89.26 to close at ZWL$2938.84.

Multiple analysts, this week, said that investors have started moving the money they had been holding before the harmonised elections in August  this year to the stock market because the ZSE is the popular investment destination for retail and institutional investors  wishing to hedge  themselves against inflation.

Enabling long-term capital raising, the stock exchange facilitates trading of securities in both primary and secondary markets.

According to investment analyst Itai Chirume, the stock exchange market has expanded as a result of investors  deploying cash  they  have been holding prior to the August 2023 elections.

“I think it was the investment of the funds that were held back before elections (in August this year) that are being deployed which have caused the stock exchange to increase in value,” Chirume told Business Times.

He added that because traders will be waiting for the results to make decisions, the market usually slows down during election seasons.

“The general observation has been that, although things slowed down a little before October because of elections, life must continue afterward, so whoever was holding  cash  in anticipation of making decisions after the elections  had to deploy it,” he said.

According to Chirume, when stock values rise, as they are currently doing, selling tends to follow as the exchange rate  depreciates.

Investors tend to sell, Chirume said, when the market grows, in order to get cash.

“While the stock market has increased by 24%, it’s possible that the exchange rate has increased by 5% or 10% during that time, which  could cause investors  to sell in order to get some dollars,” he said.

The value of stocks reached a record high of ZWL$15.3 trillion on July 19 this year.

Asked if this will be surpassed by year-end, Chirume expressed pessimism.

“So, we may struggle to get to ZWL$15 trillion if the exchange rate doesn’t go back to where it was,” Chirume said.

The ZSE has undergone some changes. Notable exits from the stock exchange include  Innscor, Axia, Zimplow, First Capital Bank, and African Sun, all of which moved to the Victoria Falls Stock Exchange, which is denominated in United States dollars.

In contrast, Getbucks made the decision to take down its listing at that time.