Bourse stuck in reverse mode

THE Zimbabwe Stock Exchange traded low last month, worsened by cosmetic changes to indigenisation and economic empowerment regulations and low liquidity on the market.

The mainstream industrial index lost 1.94 points.
This is the third consecutive month the ZSE’s benchmark industrial index dropped because of uncertainty caused by government’s  announcement in February of measures compelling companies valued above US$500 000 to “dispose” part of their shareholding to “indigenous” Zimbabweans.

Last month, 451 737 381 shares valued at US$29 229 860.65 were traded on the ZSE. Foreign trade accounted for around 8.96% of traded shares valued at US$6 667 649.33.

The mining index fell 10% during the same month to close at 143.08 points.
ZSE is now going in reverse after registering positive growth when it resumed trade in February last year.
Analysts said the decline in volumes traded was a reflection of the liquidity crisis that faced the country since trade resumed as well as the dampening effect of the indigenisation policy.

“As we get deeper into corporate activity, the depressed market seems likely to remain unabated as we have already seen some impressive performers failing to put some impetus into the market,” said an analyst with a stock broking firm. “As usual, activity is likely to remain concentrated in those counters whose business models and fundamentals are undoubtedly strong for investors’ interests.”

In May, both the industrial and mining indices showed signs of stuttering, with the former closing at 129.40 points.

At the beginning of this year, the industrial index opened at 151.88 points, a growth of 4.64 points.
When the bourse appeared to maintain the upward growth, government doused the flames by announcing the new Indigenisation Regulations which were roundly dismissed as vague and investor unfriendly.

The market retreated 16.15 points on the January figure in February as the market responded harshly to the Indigenisation Regulations.

Analysts say changes to regulations such as wording last week will not excite the market.
Analysts further argue that the changes were merely cosmetic as they merely touched on semantics, such as removing the word “cede”, but the content remained scary to investors.

Leonard Makombe