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ZSE market capitalisation declines

The Zimbabwe Stock Exchange (ZSE)’s market capitalisation has declined steadily since the July 2013 harmonised elections that ended a five-year power sharing agreement between the MDCs and Zanu PF, reflecting waning confidence in President Robert Mugabe’s government and its ability to turn the country’s economic fortunes around at a time foreign investment remains scarce.

Taurai Mangudhla/Fidelity Mhlanga

According to latest statistics from the ZSE, market capitalisation reached its peak of US$6 billion in July 2013 since the introduction of the multi-currency regime in 2009. However, in the same month general elections were held after which market capitalisation started declining to reach US$2,8 billion at the end of January 2016.

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The statistics show market capitalisation has been on a slippery slope, closing 2013 at US$5,2 billion, after losing about US$800 million between July and December 2013, before dwindling further to US$4,3 billion and US$3,1 billion at the end of 2014 and 2015 respectively.

The value of shares bought by foreigners also dwindled from an average of around US$24,5 million per month in 2013 to an average of US$23,8 million per month in 2014 before falling further to an average US$10 million per month in 2015. In the first month of 2016, the value of shares bought by foreigners stood at US$5,2 million, the lowest since June 2010’s value of US$4,9 million.

The value of shares sold on the ZSE by foreigners amounted to US$258,2 million in 2010 before rising to US$640,4 million in 2011 and US$846,6 million in 2012. In 2013, the value of shares sold by foreigners amounted to US$747,6 million before edging to US$895,2 million in 2014.

The industrial index, representing all listed companies save for four listed mining firms, slipped from 211,19 points in July 2013 to 162,79 points in December 2014 before declining further to 114,85 points in December 2015 and 103,04 points in January 2016 while the mining index also tumbled from 66,77 points in July 2013 to close 2015 at 23,72 points. The mining index went down further to close January 2016 at 19,53 points.

The listed miners which are represented on the mining index are Bindura Nickel Corporation, Falcon Gold Ltd, Hwange Colliery Company and RioZim Ltd.

On a month-on-month basis, the total market capitalisation of the ZSE slumped by 8,45% m-o-m to close at US$2,94 billion, according to Inter Horizon Securities (IH).

IH said the industrial index dropped 10, 28% to 103,04 points dragged by a 24,98% and 320,91% loss in Delta Beverages, and Innscor Africa respectively while the mining index dropped 17,66% to 19,53 points on the back of a 34,64% loss by BNC.
Activity was depressed in January as turnover dropped by 30,37% to US$11,36 million; with average daily trades for the month at US$568 100.

This comes as an independent research commissioned by the Chamber of Mines of Zimbabwe on the state of the mining industry in the country indicated the country scored poorly on the inaugural mining business confidence index (MBCI) due to an unfavorable policy environment.

A policy brief attached to the report said the mining sector’s perception on the country’s policy environment is predominantly unfavourable with 100% of respondents saying the policy environment is uncompetitive, 90% saying it is unpredictable, 80% saying it is uncertain and 83% saying it is inconsistent.

The survey also came with a mining sector business index MBCI, which measures mining business sentiments (optimisim or pessimism) about the prospects of the mining industry or the economy in general, which scored -37,86 points in 2015.

The index scores range between -100 and 100 points with -100 signifying much less confident followed by-50 which signifies slightly less confident than 0 which means confident, followed by 50 which is slightly more confident with the highest score being +100 which stands for much more confident.

The MBCI considers economic prospects, profitability prospects, growth prospects and access to capital among other variables.

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