AfDB ranks ZSE worst performer in African region

ZIMBABWE’S stock market was ranked the worst performer in the African region for the month of March 2015 as lack of investor confidence took a toll on trade, the latest African Development Bank (AfDB) monthly report on Zimbabwe shows.

Fidelity Mhlanga/ Taurai Mangudhla

The Zimbabwe Stock Exchange (ZSE) was the worst performer as the industrial and mining indices lost -5,43 % and -19,51 % respectively, followed by the Mauritius All Share Index which also shed -1,99 %, according to the AfDB.

“Developments in regional stock markets reveals that the Nigerian Stock Exchange All Share Index was the best performer for the month of March 2015 having gained 2, 72%, followed by the Malawi Stock Exchange All Share Index (2, 63 %) and Botswana Stock Exchange Domestic Companies Index (1,04%),” reads the report for the period to March 2015.

Zimbabwe’s poor performance comes as foreign investor participation on the bourse declined with both turnover value and volume of shares bought and sold by foreigners declining in March 2015 compared to March 2014, signalling low confidence on the market.

“The share of foreign investors in total turnover on the ZSE declined by 41,9 percentage points from 76, 23 % in February 2015,” said the regional bank.

In March 2015, the stock market was characterised by a decline in turnover value by 45,64% while the volume of shares traded on the local bourse increased by 230,32%.

The stock traded depreciated in value, underpinned by low foreign investor confidence on the local bourse on the back of a slowdown in general economic activity.

“A monthly comparison of stock market activities showed that turnover value declined by 45,64% while the volume of shares traded on the local bourse increased by 230,32%. This implies that the stock traded depreciated in value in March 2015 compared to February 2015. Foreign investor participation on the local bourse declined, with both the value of shares sold and bought by foreigners declining by 82,78% and 75,52% respectively,” said AfDB.

Up to date statistics show the ZSE market cap remained bearish in May, falling by 3,27% from US$4,4 billion to close at US$4,29 billion.

According to Inter Horizon (IH) securities monthly snapshot, the industrial index fell by 2,11% from 156,2 points to 152,96 points, weighed down by an 8,16% loss in Econet, mid-caps Hippo Valley, OK Zimbabwe and Seedco which recorded losses of 11,54%, 10,00% and 5,26% respectively.

During the same month, heavyweights Innscor Africa and Delta Beverages recorded modest gains of 0,1% and 3,37% respectively.
The mining index recovered 3,54% in the month, buoyed by a 50% gain in RioZim in anticipation of the opening of the rights offer which opened on 8 June.

Other significant gains in the month were seen as Art Corporation grew by 66,67%, Star Africa surged 40%, Masimba Holdings gained 25% and CFI up 24,50%.

The largest losses were posted in Truworths which tumbled 33,33%, Rainbow Tourism Group fell 33,33%, Powerspeed lost 31,82%, Fidelity Life receded 23,91% and Zimplow down 23,08%.

The securities firm says activity in May was subdued with turnover dropping 50,2% month-on-month to US$19,17 million with average daily trades of US$1,28 million. The most significant contributions to total value traded were Econet Wireless, Delta Beverages and African Sun , contributing 27%, 27% and 16% respectively.

Total volume traded went down 60,1% to 235,48.

Delta Beverages and OK Zimbabwe both recorded a 4% contraction in the top line in their FY15 results, but maintained their respective market shares.

“Therefore this can be considered a good indication of the rate at which consumer spend is declining in Zimbabwe; the key theme remained downward migration in the value chain from higher margin product to more affordable lower margin products. This has seen a general trend of softening margins across all consumer-facing counters,” IH said.

In the face of negative top-line growth and contracting margins, IH securities say it is becoming increasingly imperative for companies to focus on cost optimisation in order to protect margins and defend bottom line growth.

IH commended Innscor Africa’s plans to unbundle the Quick Service Restaurants (QSR) segment of the business as a dividend in specie to existing shareholders, after which QSR will be listed as a separate entity.