Many people I interact with often view equities as risky and honestly, I once thought the same. But after spending a few years in this space, my perspective has completely changed. As Warren Buffett once said “Risk comes from not knowing what you’re doing.” From my experience, equities can actually present some of the most compelling opportunities with limited downside, as long as one remains informed and rational.
That’s why it’s crucial for any investor to understand both fundamental and technical analysis in order to make sound decisions. In this piece, I will walk you through how our markets performed in October — the movers, the shakers — break down what stood out and what could be next.
Let’s dive in, shall we?
Both the Zimbabwe Stock Exchange (ZSE) and the Victoria Falls Stock Exchange (VFEX) closed October on a positive note. The ZSE rebounded, with market capitalisation rising 2,98%, partially recovering from September’s 0,24% dip, while the VFEX All Share Index climbed another 6%, extending its impressive 21% surge from September.
In my previous monthly review, I highlighted how the VFEX had been on a strong uptrend throughout the third quarter ending September, and October’s performance only extended that momentum though some counters, such as Innscor, retraced slightly after a strong Q3 rally.
The ZSE recorded 16 gainers against 19 losers, with Econet and Delta featuring among the top 10 gainers, advancing 13% and 11%, respectively. Considering these two counters make up nearly 55% of the ZSE’s market capitalisation, it’s easy to see why they remain central to any discussion about the local bourse.
Trading activity, however, slowed. Monthly turnover dropped to ZiG391 million, from ZiG454 million in September. Delta remained the most active stock, contributing ZiG182 million (about 46% of total turnover), followed by Econet (ZiG98 million, 25%) and CBZ (ZiG69 million, 18%).
In September, Delta had also led the pack with ZiG220 million (48%), while Econet followed with ZiG181 million (40%). Meanwhile, the VFEX maintained its positive momentum as aforesaid, with market capitalisation up 6% in October, building on the 21% jump from September.
- Inaugural Zim investor indaba highlights
- Stop clinging to decaying state firms
- ZB explores options to tackle inflation
- Zim operations drive FMB Capital
Keep Reading
Trading was dominated by Innscor and Padenga, which exchanged US$3,7 million and US$1,5 million worth of shares, respectively. In September, Innscor had traded US$5,8 million, accounting for 69% of turnover, followed by FCB and Padenga, which collectively represented 21% of monthly turnover.
The VFEX closed October with seven gainers and four losers, though turnover slipped 20% to US$6,8 million, down from US$8,5 million.
Caledonia topped the gainers, while African Sun extended its losing streak, marking its third consecutive month as the biggest loser. Foreign investor activity painted an interesting story. On the ZSE, foreign participation surged, while on VFEX, it cooled off.
Foreign purchases on the ZSE jumped from ZiG1,2 million to ZiG11,6 million, while sales rose to ZiG174 million from ZiG95 million.
Conversely, on the VFEX, foreign purchases fell from US$10 000 to US$6 700, and sales declined from US$4,2 million to US$2,7 million.
This could suggest foreign investors are increasing exposure to undervalued ZSE blue chips, while taking a “wait and see” approach on the VFEX, given the strong price rallies in recent months. With Econet and Delta gaining 13% and 11%, their market capitalisations expanded, keeping them firmly in the top two positions on the ZSE, with Delta in the lead.
It’s an encouraging sign, especially considering these counters trade in ZiG, a currency that has faced tight liquidity controls by the RBZ. I expect both companies to remain key drivers of ZSE activity and believe they still have upside potential. On another note, RTG replaced Mashonaland Holdings in fifth place by market capitalisation, while Hippo overtook FML to rejoin the top 10. On the VFEX, Padenga dethroned Innscor on the top spot being the biggest counter by market cap, and Axia replaced African Sun in seventh place after the latter’s continued losses over the past three months.
Looking ahead, the VFEX may experience some volatility in November, with mixed performances likely. Counters such as Innscor already showed mild pullbacks in October, shedding 2,88%, while Padenga could face short-term pressure as gold prices soften, though any declines are likely to be modest.
Taimo is an investment analyst with a talent for writing about equities and addressing topical issues in local capital markets. He holds a First Class Degree in Finance and Banking from the University of Zimbabwe. He is an active member of the Investment Professionals of Zimbabwe community, pursuing the Chartered Financial Analyst charter designation.
