eBusiness Weekly
Enacy Mapakame
Pharmaceutical products producer, MedTech, paced the fastest on the Zimbabwe Stock Exchange in 2019 adding over 7 000 percent of value ahead of the average market growth of 57 percent.
The market generally witnessed gains on all counters with the exception of Seed Co Limited and Cassava that contracted.
Zeco Holdings remained stagnant.
Of the recorded gains, penny stocks and mid-tiers recorded highest gains in a year that was challenging due to the volatile economic environment.
Inflationary pressures, lack of access to foreign currency, erratic power supplies and waning disposable incomes resulting in volumes decline, were some of the major challenges that confronted businesses in 2019.
Policy interventions introduced during the year also had both positives and negatives on businesses. For instance the floating of the exchange rate and banning of the multi-currency system for all local transactions, also had effects on the local bourse as investors adopted a wait-and-see attitude due to uncertainties that accompanied the currency reforms.
Despite these challenges, MedTech and other penny stocks and mid tiers, remained resilient and displayed the brightest, recording massive gains in the year.
From agriculture to manufacturing and logistics, the small value stocks had a fine run on the local bourse.
According to figures from the Zimbabwe Stock Exchange, MedTech recorded a 7 500 percent increase followed by Ariston with a 690 percent gain. Hospitality group, RTG and ZHL came in with gains of 507 percent and 406 percent respectively.
Diversified hospitality group, Meikles, wrapped the top five gainers with a 392 percent increase while only listed media group, Zimpapers jumped 379 percent in the year under review.
Financial services group, Old Mutual, put on 360 percent while CBZ closed the year 350 percent firmer. Other top gainers for the year were Proplastics and Willdale that were 321 percent and 260 percent respectively. Dawn and Padenga rose 192 percent and 188 percent in that order.
Penny stocks are highly speculative but also have potential to give high returns, making them attractive to investors.
In other countries, penny stocks are also known as cent stocks or small value stocks whose shares trade at a low value per share while in big markets, they can be less than a dollar while others below US$5.
Apart from their potential for high returns, which make them attract investors, the economy in Zimbabwe was characterised by volatility with inflationary pressures causing fluctuations in prices of goods and services.
This drove investors to the local bourse for a safe investment and to store value at a time other investment channels such as the money market were unattractive.
Inflation raced from 5,39 percent in September 2018 to 175,6 percent by June 2019, showing no signs of relenting until Treasury suspended its publication in June.
