ZSE sheds ZWL$371bn in July

August 4, 2022



The Zimbabwe Stock Exchange (ZSE) closed July 15% lower with the local bourse shedding ZWL$371bn in the value of stocks to ZWL$2.07 trillion attributed to worries over government interventions aimed at curbing speculative activities.

In June, ZSE closed at ZWL$2.44 trillion.

The negative trade for stocks was also attributed to currency challenges and liquidity constraints, high interest rates, among others, investment analysts said this week.

The month also saw a volatility surge in annual inflation which rocketed to 256.9% from 192% in June, resulting in thin trading volumes in the equity market.

High inflation changes the cost of production for companies and investors are wary of that as they tend to lose.

Exacerbating the situation is that investors, especially the foreign investors, who continue to exit the ZSE, have scaled back their expectation of the extent to which the Reserve Bank of Zimbabwe, which has come under intense pressure, will tighten the monetary policy to curb inflation.

This signifies a bear market will continue to rock the ZSE.

Volatility stayed elevated at the ZSE with the benchmark All- Shares index pulled 18.8 points or 0.11% points back to finish lower at 16 594.91 points.

The Top 10 index lost 0.06% to close at 10 265.73 points while small caps lost 0.43% to 496 827.15 points.

Medium Cap index eased 0.13% to 33 019.62 points.

Trading in the negative was Masimba Holdings Limited, whose trading value plunged ZWL$4.55 to close at ZWL443.45, while milk processor Dairibord Holdings Limited eased ZWL42.31 to ZWL430.34.

Financial services group ZB Financial Holdings Limited was ZWL$2.00 weaker at ZWL$122.00 while Simbisa Brands lost ZWL$50.61 to ZWL$218.90.

Zimbabwe’s largest telecommunications company, Econet Wireless Zimbabwe lost ZWL40.58 to ZWL$157.29.

“It’s a tough bear case for stocks right now as the overall sentiment is declining. It’s likely to persist on worries of unprecedented government interventions, high inflation and liquidity constraints,” an investment manager who preferred anonymity told Business Times this week.

The losses outweighed gains by the country’s leading packaging firm, Nampak , which led the movers after adding ZWL$1 to close at ZWL$12.00 while Axia Corporation jumped 0.96 to ZWL$79.93.

Also on the flip side, cash-rich conglomerate, Innscor Africa Limited, was ZWL$0.90 stronger at ZWL$299.97 while FBC Holdings and OK Zimbabwe gained ZWL$0.80 and ZWL$0.69 to ZWL$65.80 and ZWL$29.96 respectively.

The central bank raised interest rates to 200% in the month of July from 80% as part of efforts to combat the scotching inflation.

This week the Reserve Bank of Zimbabwe Monetary Policy Committee maintained the interest rates at 200% despite a scotching inflation.



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