ECONOMIC headwinds, investor fatigue and depressed company earnings saw the Zimbabwe Stock Exchange (ZSE) record its worst start to a year since dollarisation in 2009.
At the close of the first quarter ended March 31 2016, the ZSE’s main industrials index had lost 15,02%, its biggest first-quarter loss since dollarisation in 2009. The previous all-time low was a 12.76% loss recorded in the first three months of 2014.
Turnover for the period of about US$43,66 million was also 37,39% lower than the US$69,74 million invested for the prior comparative year and only above turnover of US$5,5million recorded in 2009, the first year of dollarisation.
Analysts said the stock market’s out-turn is to be expected, given the performance of the economy in general and most listed companies in particular. Heavily capitalised companies, which have been a safe haven for most foreign investors, have not been performing to expectations with both revenues and profitability continuing to fall unabated.
“When you analyse the overall market’s turnover since dollarisation, you will find that most investors were comfortable in investing in blue chip companies such as brewer Delta Corporation, telecoms company Econet Wireless Zimbabwe and diversified conglomerate Innscor, but of late these companies have not been performing and investors have since lost interest,” said analyst Jerome Negonde.
In its last results update for the half-year to September 2015, SABMiller associate Delta reported an 8% decline in revenue to $269m, reflecting volume and price reductions.
Econet was in a similar predicament, with revenue falling by 17,7% to US$323 million in the six months to August 31 2015, on the back of a tough economic environment and some significant regulatory changes that impacted the telecommunications business.
Negonde noted that the poor performance of the bourse reflects lack of confidence in the local economy by investors, “especially with regards to our economic policies”.
Another analyst with a local wealth management company, who requested anonymity, said what is happening on the stock market is a show of an economic breakdown, with the situation deteriorating further from previous years.
“I think it boils down to lack of acknowledgement that as a country we are doing something wrong. In the words of Albert Einsten, one who keeps doing the same thing and expecting different results is insane,” said the analyst.-fin24