Bears are set to persist into 2016 on the Zimbabwe Stock Exchange (ZSE) owing to anticipated poor earnings reports and weak investor sentiment, stockbrokers say.
This comes after the ZSE market capitalisation shed off US$1,3 billion in value on a year-on-year basis to US$3bn as at December 31 2015 from US$4,3bn in January.
The benchmark industrial index which opened the year at 167,16 points, closed at 114,85 points in December.
The resources index on the other hand dropped to 23,72 points from 55,38 points in the same period.
“The market is a reflection of the economy. Our companies are not performing well. We cannot see the market changing when companies are not performing better. We need real investment within the economy,” said a stockbroker with a leading a securities firm.
Another analyst says the decline in share prices by most of the listed companies reflects the value investors are placing on companies.
“In 2015, we saw companies taking share price cuts. Other companies had a 70% drop in share price while others had 30%.
“Companies may continue experiencing price cuts going into 2016. Going by the share price decline and weak consumer demand, we don’t expect better financial results this year,” an analyst who declined to be named warned.
ZSE turnover reached its lowest level in October since the market started trading in multiple currencies on February 9, 2009 recorded in April of the same year when the value of shares traded stood at US$11,6 million.
Delta’s share price which peaked to US$1,16 in February 2015 lost 30% of its value on a year-on-year basis.
Last year most companies suffered from depressed consumer demand and the trend is expected to persist into 2016.
In its 2016 budget statement last year, Treasury said the on-going efforts by government to grow the economy, underpinned by positive sentiments arising from accelerated re-engagement with the international financial institutions, augurs well for the recovery of market activity at the ZSE from 2016.
Treasury said it was necessary that measures be instituted to lower trading costs, and broadening the variety of products offered on the stock market.
Government said companies that are not listed, but have securities, can trade in the Alternative Trading Platform market, for example Community Share Ownership Trusts and Employee Share Ownership can be traded in this market.
The Securities and Exchange Commission of Zimbabwe has developed guidelines to be used to regulate this market, and have circulated them to stakeholders for input, before they are gazetted in the first quarter of 2016.