LIVINGSTONE MARUFU
The Zimbabwe Stock Exchange (ZSE) market capitalisation has this week gained 3.1% to ZWL$2.8 trillion from ZWL$2.7 trillion last week responding to high inflation and currency volatility.
The All Shares gained 3.115 to 22 838.15 points from 22 149.04 points while the Top 10 index grew 2.185 to 15 017.30 points.
Small caps gained 4.85% to 505360.82 points.
Investment analysts told Business Times that high inflation was pushing equity prices up as investors want to hedge against loss of value.
Annual inflation for March stood at 72.7% from 66.1% in February, resulting in investors rushing to the local bourse as its safe haven status proved to be appealing in uncertain times.
“The market cap is tracking the exchange rate which is moving at a fast rate in nominal terms. What the bourse is simply doing is that it is simply rerating hence the bullish sentiments on the stock exchange,” market researcher and analyst Batanai Matsika told Business Times.
Another analyst said Zimbabwe has been experiencing high inflation and the market capitalisation has been on a constant upwards movement as most investors move to offload the local currency by buying shares.
“We continue to witness the vicious cycle of high inflation therefore the investors want stocks to hedge (against) inflation,” the analyst said.
In its 2022 Economic Outlook report, research firm Morgan & Co projects the ZSE market capitalisation to hit ZWL$3 trillion this year as inflation continues to ravage the economy.
“The bourse will be the most feasible option to preserve value on Zimbabwean capital markets as cash and money market instruments are not the best option given that there is a higher expectation of deterioration in inflation fundamentals,” Morgan & Co said.
The report said the financial services sector remained attractive and foresees potential upswings and corrections in the market.
The consumer sector also remains an interesting division given the defensive nature of food, according to the report.
Morgan & Co said the real estate or property sector remains predominantly a US$ asset in Zimbabwe and presents liquidity constraints for medium-term investors.
The Reserve Bank of Zimbabwe governor John Mangudya said the central bank was putting in place measures to tame inflation to bring stability in the economy.
