The Zimbabwe Stock Exchange (ZSE) seemed poised to break the US$6 billion market capitalisation record with investors piling further into equities in June.
By Chris Muronzi
As of Wednesday, industrials were valued at US$5,5 billion and seemed set to breach a psychological 200 point mark barrier at 195.23 points from 193,96 points the previous day.
Market analysts say once the US$6 billion record is broken, the market could start testing its resistance.
The ZSE’s all-time peak since the adoption of multi-currency system was US$6 billion in terms of market capitalisation in May 2013.
“We are approaching elections and the last time we had an election, we experienced a peak point for the market. Also, asset managers are getting a bit of funds from clients,” an investment analyst with a stockbroking firm noted. “We could see the market rallying right through the end of this quarter. After that, we could see a bit of profit taking.”
The mainstream industrial index gained 19,9% as asset managers took positions in equities.
In May equities jumped 16,8% to close at 162.34 points propelled by a glut of treasury bills maturities and inflation fears in the Southern African country.
This comes after another bull run in the fourth quarter of last year in the wake of reports central bank chief John Mangudya was forging ahead with plans to introduce bond notes.
But analysts say the rally could fizzle out in the near term as asset managers shift investments from equities into fixed income investments.
Government paper and profit-taking could however see the market sobering up a bit in the short-term, an investment analyst says.
“Going forward, the market could see gains in small caps. In the early days of the rally, blue chips were propelling the gains and we used to gains of 3% in a day’s trade. Now, the gains are becoming marginal,” the analyst said. “At the moment, investor focus has moved away from counters with a huge impact on the index to counters to small caps.
This will see the market post marginal gains going forward.”
As of last month, a total 27 counters were trading above their book values.
But investors are still cautious of banks and property companies. Amid rising inflation concerns, the stock market is proving a safe haven for both individuals and asset managers alike.