ZSE loses $1,1 billion

HARARE - The Zimbabwe Stock Exchange (ZSE) shed $1,1 billion between July 2015 and July 2016 as foreign investor scepticism saw the local bourse register large divestments, the Reserve Bank of Zimbabwe (RBZ) said.

As a result of the divestments, the central bank pointed out that net foreign capital outflows had risen from $4,5 million as at June 2016 to $5,2 million at the end of July as the market remained bearish.

“Foreign investors remained sceptical about Zimbabwe’s investment climate and this resulted in significant disinvestments in heavily capitalised counters,” the apex bank said in its monthly report for July.

RBZ also pointed out that market turnover had registered a 34,44 percent slump, from $18 million in June 2016 to $11,8 million in July 2016.

“This partly reflected thin trading on the ZSE due to bearish investor sentiment,” the RBZ report said, adding that the volume of shares traded on the bourse fell 35,3 percent, from 88,5 million shares recorded in the preceding month to 57,2 million in July 2016.

During the period under review, the mainstream index declined by 2,18 percent, to close at 98,84 points as the resources index increased by 4,05 percent to close at 25,72 points in July 2016, from 24,70 points in June 2016.

“Market capitalisation fell by 0,36 percent, from $2,7 billion in the previous month to $2,7 billion in July 2016, on account of losses in the mainstream index,” the central bank said.

This comes as local research firm, Zimbabwe Economic Policy and Research Unit (Zeparu), recently pointed out that activities on the ZSE were to continue on a downward trajectory due to diminishing investor confidence.

Last year, the market’s free-fall worsened from 2014, as trading was weighed down by low foreign investor participation as well as tight liquidity conditions in the domestic economy.

The industrial index which opened 2015 at 162,57 lost 47,72 points (29,35 percent) to close the year at 114,85.

For the greater part of 2015 the index fell below its five year average for the period 2010 to 2014.

However, in the first quarter it sunk to under 100 points, where it has been consistently trading at.

Meanwhile, the annual broad money supply growth for the month of July 2016 increased by 1,71 percentage points to 14,84 percent, from 13,13 percent in June 2016.

“Growth in money supply was partly underpinned by tobacco related foreign exchange inflows. As at end July 2016, $558,4 million had been realised from the sale of 190,05 million kilograms of tobacco,” RBZ said.

In terms of proportions, demand deposits constituted 53,8 percent of total deposits; followed by over 30-days deposits, 19,4 percent, under 30-days deposits, 14,3 percent, and savings deposits, 12,5 percent.

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