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ZSE market capitalisation declines

NET foreign sellers dominated the bearish run on the Zimbabwe Stock Exchange as market capitalisation fell to US$2,6 billion in February from US$2,7 billion in prior month.

Bernard Mpofu

The underperformance of the local bourse — a key economic performance barometer — continued to reflect waning confidence in the economy after total market capitalisation eased, marking a persistent bearish run for 11 consecutive months.

The industrial index fell to 99,50 points in February from 103,04 points registered in prior month with analysts expecting the bearish run to continue as companies release lower-than-expected earnings.

The month of February headlined the lacklustre performance of the ZSE benchmark index which declined below the psychological 100 point mark, signalling an ailing economy marked by a biting liquidity crunch and abrusive economic policies that scare investors.

Turnover for the period under review rose to US$15 million from US$11 million recorded in January as foreign investors offloaded their stocks. The value of shares sold by the investors stood at US$13 million in February compared to purchases worth US$5,2 million.

The mining index also declined to 19,14 points from 19,54 points in january on the back of weakening commodity prices on the international market.

Interest in the ZSE’s blue-chips — Delta, Econet, Innscor, Old Mutual and Seed Co — has also been on the wane.
Heavyweight counters lost significant value of their share prices only reducing the appeal of the ZSE as selling pressure mounted on investors.

Now with 61 active counters, the ZSE at its peak had 79. Over 10 counters have delisted from the ZSE in the past six years. Counters that have been struck off the ZSE register include African Banking Corporation, Astra Holdings, Pelhams, Trust, Tractive Power, Interfresh Holdings and PG Holdings, among others.

After shaving off US$1,3 billion in 2015, market watchers contend that the exchange will continue to suffer in 2016 in the absence of a stimulus package in the economy.

Six new counters are expected to list on the Zimbabwe Stock Exchange (ZSE) this year despite liquidity constraints that have seen market capitalisation plunging to US$3 billion last year from US$4,3 billion.

A listing drought on the bourse ended last year when Proplastics and Simbisa Brands were added on the ZSE register through unbundlings.

Micro-finance institution, GetBucks, became the first counter to list on the ZSE this year through an initial public offering. The company registered an undersubscribed capital raising initiative due to liquidity constraints.

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