Value of equities soars

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Discounted market capitalisations are prevailing on the Zimbabwe Stock Exchange.

The value of shares surged well over US$10 bn on the Zimbabwe Stock Exchange (ZSE) amid heightened inflation fears and deepening currency volatility.

By Chris Muronzi

This comes as financial analysts have warned sustained gains in blue chips and counters with good fundamentals would not trigger any massive profit-taking on the market, with local investors still holding on tightly to stocks.

Foreign investors, however, could start exiting their positions and taking profits. Yesterday the bourse was valued at US$10,8bn.

On Wednesday the ZSE’s market capitalisation had gone up by US$1bn to end the day at US$9,9 bn, the highest since dollarisation.

Shares are seen rising beyond the US$11bn mark with investors piling further into equities.

Other asset classes such as property, a good hedge against inflation, are scarce on the market and are priced at a premium, while demanding payment in hard currency or offshore accounts.

The main industrial index added 18,8% 374,34 points, the biggest gain this year powered by gains in Econet and Delta. On a year-to-date basis, the index is up 159%; the highest in the world.

Delta and Econet have a combined market cap of US$4,2 billion, a figure accounting for 43% of the market’s value.

Econet gained 16,6% to close at 77,11 US cents. Delta was up 13,3% to close at 2,22 US cents

The two counters — Delta and Econet — are firm investors’ favourate on the market and easily sway the market given their weighting on the industrial index.

Seedco advanced 19,9% to close at US$2,30.

Stocks have been rising rapidly despite very thin volumes in a market local fund managers and investors are holding on to equities as a hedge against inflation.

A total 1 067 782 delta shares were sold on Wednesday. Stockbrokers say the deal was done by a foreigner who was exiting his position in the company.

Foreign investors with a high risk appetite stand to profit from the surge in shares on the ZSE should plans by the central bank to set up an investor fund come to fruition.

The fund, which was set to be launched by the beginning of this month, was meant to allow free movement of investment funds in and out of the country. On Tuesday, investors piled further into equities with the market cap closing trades at US$8,9 bn, its peak since dollarisation in 2009.

Old Mutual and Afdis added 8% and 17.94% to trade at $5,5284 and US$1,0025 respectively.

British American Tobacco advanced 0,8% to close at US$18,3500, while Econet fell by 7,83% to close at US$0,6636.

On Monday, it was the same story.

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