ZSE shows signs of life

HARARE - The Zimbabwe Stock Exchange showed recovery signs in the week to April 8, after the local bourse’s main industrial index marginally increased by 0,12 points to close the week at 97,92 points.

Statistics from the Reserve Bank of Zimbabwe (RBZ) show that the resources index also gained during the period by 0,63 points to close the week under analysis at 20,16 points — providing respite to both local and foreign investors.

Owing to improved trading during the period under review, market capitalisation increased by 0,16 percent to close the week at $2,6 billion from 2,5 billion.

The central bank noted that industrial index gains were anchored on improvements recorded by Fidelity Life Assurance (14,44 percent), GetBucks (8,11 percent), FBC Holdings (7,95 percent), Econet (two percent) and Old Mutual Plc (0,45 percent).

“Bindura Nickel Corporation Limited and Rio Zim, the only active mining counters during the period under review, largely drove the resources cluster,” RBZ said.

Market turnover increased by 31,57 percent, from $2,41 million in the previous week, to $3,17 million during the week under review.

RBZ attributed the improvement to positive sentiments that characterised the week under review as a total of 57,4 million shares were traded during the week under review, compared to 24,5 million previous week.

Local research firm, Zimbabwe Economic Policy and Research Unit (Zeparu), expects the recovery to be short-lived as it anticipates activity on the bourse to continue on a downward trajectory due to diminishing investor confidence and tight liquidity.

“In 2016, activities on the ZSE are expected to continue on a downward trend coupled with low investor confidence, declining economic fortunes worsened by the El Nino effect which will result in one of the most severe droughts since 1992,” the firm said.

The research firm noted that the poor stock market performance was also reflected in falling turnover, with the barometer noting that foreign investor participation on the local bourse was also going to continue dipping.

This comes as the bourse had maintained a steady downward trend with the market losing $10,2 million in the first week of April.

The ZSE contracted by 14 percent to $2,6 billion in the three months to March 2016 from $3,1 billion in December last year.

Figures from brokers, Lynton Edwards Stockbrokers (Les), show that the equities market traded lower in the first quarter to March 31, 2016, with the main industrials index losing 15,02 percent to 97,61 points, while the mining index was worse off, down 17,66 percent to 19,53 points.

2015 saw activities on the ZSE declining from 2014 levels, as trading was weighed down by low foreign investor participation and tight liquidity conditions in the domestic economy.

The industrial index which opened 2015 at 162,57 points lost 47,72 points (29,35 percent) to close at 114,85 points. For the greater part of 2015 the index fell below its five-year average for the period 2010 to 2014.

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