The value of Delta Corporation (Delta) stock traded on the Zimbabwe Stock Exchange (ZSE) in 2015 plunged to US$65,5 million from US$96 million in the previous year due to a massive devaluation of the share price, a biting liquidity crunch and low investor appetite on the local bourse.
Delta was hardest hit by the country’s economic implosion characterised by biting liquidity constraints, weak aggregate demand and high unemployment.
The underperformance of the economy, which is this year expected to register a modest 2,7% growth has seen investors shifting their focus from traditional blue chip counters with strong shareholder support. Trading figures obtained by businessdigest, which include pre and automated trading platform trades show that while the beverage maker continues to be among investor favourites, a weakening economy that has seen its volumes and turnover tumbling resulted in low trades.
Delta’s share price which peaked US$1,16 in February 2015 lost 30% of its value on a year-on-year basis. At US$864 million, its market capitalisation now accounts for nearly a quarter of the ZSE total market capitalisation. On the contrary, engineering concern Zeco, which listed in 2008 became the most illiquid stock on the local bourse, with shares worth a paltry US$61 exchanging hands last year from US$169 in 2014.
Loss-making Zeco’s market capitalisation stands at around US$92 000, the smallest of the listed counters with a share price of US0,02 cents.
Conglomerates Innscor, Econet, Colcom, Natfoods and BAT are some of the top 10 traded firms in a market that was largely dominated by sellers.
Other illiquid stocks include delisted furniture retailer Pelhams (US$1 363) and struggling engineering concern Radar.
Analysts say counters such as Barclays and Meikles did not make it to the top 10 as shareholders because they are illiquid and tightly controlled.
Analysts blame lack of clarity on indigenisation regulations compelling foreign investors to sell controlling stakes to locals for the underperformance of the bourse.
Government has withdrawn indigenous and empowerment regulations barely a week after gazetting far reaching changes to the policy widely seen as an anathema to foreign direct investment as confusion continues to dog the controversial policy.
Zimbabwe, in 2008 enacted the indigenisation and empowerment law, which compels foreign investors to sell at 51% stake to locals.