A SHARE price that could buy about four pints of beer at the beginning of the year in United States dollar is now worth half as much.
A performance chart compiled by a local stockbroker indicates that most counters on the stock market have lost at least 50% of their value in real term in US dollars in the last six months, save for a few that have unique business models under the prevailing economic conditions.
The staggering performance of the Zimbabwe Stock Exchange-listed companies in United States dollar terms certainly questions the credibility of international ratings that rate the local bourse as a top performer regionally and perhaps internationally.
Apart from several non-formal investments such as illicit foreign exchange dealings and parallel market trades of goods and commodities that are in short supply on the formal market, the local bourse seems to be the only prudent investment.
Sadly, despite the seemingly unstoppable rally being recorded on the securities market, real value of most stocks is not translating to marginal gains for most listed firms. Companies attribute this to a host of problems, which include acute shortage of fuel and a “command type” of economy.
Blue chips and small talks alike have become victims of this phenomenon that some analysts have described as a reflection of “hogwash” performance of the market.
Dual listed Pretoria Portland Cement Company was the biggest loser in the last six months shedding close to US$6.
The South Africa-based cement manufacturing company opened the year at $45,1 million and was trading at $92 billion six months later.
University of Zimbabwe business professor, Anthony Hawkins attributed this trend to excessive money supply growth and runaway inflation.
“This phony market is driven by rampant inflation and massive money supply growth. It is not the best performing stock market, itâ€˜s hogwash,” Hawkins said.
Old Mutual, which was trading at $17 million at the beginning of the year, lost a dollar during the period under review.
Conglomerate Kingdom Meikles Africa Ltd and mobile communication giant Econet are among the few companies that defied all odds by gaining US 0,31cents and US 0,21cents respectively.
On the contrary a financial analyst for an international bank maintained that the local stock market is indeed out-performing most peers within the continent adding that the loss in real value was resulting from an “overvalued” greenback.
“This trend can be seen as a reflection of an overvalued dollar,” said the analyst.
By Bernard Mpofu