ZSE market capitalisation sheds nearly US$2 billion

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Stockbrokers trade on the floor of the Zimbabwe Stock Exchange (ZSE) in Harare, February 24, 2015. ZSE on Monday lifted the suspension of hotel group Meikles Africa after the company threatened to take court action, shelve new investment and a possible listing of a subsidiary. Meikles, which owns two premier hotels in the capital Harare and the resort town of Victoria Falls, was suspended last week to allow for an investigation on whether it overstated a debt owed by the central bank. REUTERS/Philimon Bulawayo (ZIMBABWE - Tags: BUSINESS)

ZIMBABWE Stock Exchange (ZSE) market capitalisation, at US$3,4 billion, shaved off nearly US$2 billion as at September 30 2015 on a year-on-year basis, weighed down mainly by the poor performance of blue chip counters, latest ZSE figures show.

Bernard Mpofu

The ZSE is a barometer of economic performance.

On a year to date analysis, beverages giant Delta Corporation — Zimbabwe’s biggest-listed company — share price shed 18% to 83 cents, while Econet, second largest counter, also retreated 56% to 26,7 cents reflecting weak appetite on strong counters. Innscor and National Foods were also down 1,7% and 12% respectively.

Delta, a unit of South Africa’s SABMiller, the world’s second largest brewer, accounts for nearly a third of ZSE market share.

ZSE figures show that as at September 30 this year, market capitalisation stood at US$3 444 530 965 compared to US$5 140 164 893 as at September 2014.

Despite recording improved foreign participation, the benchmark industrial index retreated 11% in the third quarter ending September 30 compared to a gain of 4,7% registered during the same period last year. This implies that an investor who invested a dollar this year lost 11 cents by the end of the quarter, while an investor who also invested a dollar last year gained nearly five cents.

The resources index registered negative growth during the same period from a positive outturn last year.

Analysts say Zimbabwe requires a stimulus package and structural reforms to ensure economic recovery and growth, amid fears that the economy could slide further into recession next year. An underperforming economy has seen government revising economic growth projections to 1,5% from an initial projection of 3,2% on weakening commodities prices.

Investors are also concerned over the country’s indigenisation and empowerment policy compelling foreign investors to cede at least 51% stakes to locals. Government has attempted to tone down its rhetoric on the empowerment law but this has yielded little activity.

Foreign participation improved to 64% in the third quarter of 2015 relative to 48% in the same period last year.

According to MMC Capital, activity on the local bourse will likely remain depressed for the remainder of this year on the back of poor macro-economic conditions.

“Economic indicators such as inflation, savings rate, money supply and the trade balance continue to show that the economy is indeed running out of steam,” an analyst said.

The ZSE market capitalisation plunged to US$3,8 billion in the first half of 2015 from US$4,8 billion during the same period last year, losing US$1 billion in valuation, mirroring an imploding economy.

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