Information at hand shows that an average of 43,18% worth of capital invested between April to October was injected by foreign investors, marking a shift from the previous trading pattern where local institutional investors were more active.
The introduction of multiple currencies early this year has seen market capitalisation of the ZSE dropping to the current level of $3,5 billion from $12 billion, registered 10 years ago. This figure represents a tiny fraction of the lively Johannesburg Stock Exchange, the world’s 19th largest bourse which trades an average of R10 billion daily.
ZSE chief executive Emmanuel Munyukwi last week told journalists in the capital that the bourse had since April been driven by foreign investors owing to cash constraints on the local market. He said the “velocity of shares” trading on the stock exchange was around 1,2% adding that it was desirable for liquidity to rise up to 15%.
“One of the biggest problems on the market is liquidity,” Munyukwi said. “The velocity of shares exchanging hands is still low. Right now the market is being driven by foreigners who have become net buyers while local investment funds have been net sellers to meet their commitments such as salaries. Share prices are currently depressed but you still have one or two companies that are doing well.”
Inactivity and low share prices according to the ZSE boss had resulted in 10 counters out of the 72 trading, accounting for 65% of the current market capitalisation.
He however could not be drawn to comment on which foreign investors were driving the ZSE. Analysts said the new trend could see major ownership changes in listed companies. According to ZSE regulations, 30% of shares for listed companies should be in the hands of the public.
But market analysts said investors from Russia and Ukraine had since the resumption of trade in February become net buyers for the relatively cheap stocks which local investors were hurriedly disposing to meet other commitments. They said Renaissance Capital which is linked to Russian investors and Terra Partners had been active on the market, broking deals for the foreign investors.
Despite problems on the bourse, blue chip Econet has managed to grow during the decade long recession.
Econet which became the first company to declare a divided this year had its share jump to over $5 in recent times from $0,35 in February while most of its peers on the ZSE are still trading low.