ZSE reacts to currency reforms

28 Jun, 2019 - 00:06 0 Views
ZSE reacts to currency reforms

eBusiness Weekly

Tawanda Musarurwa

The local equities market took a hit in the week to June 27 as investors shied away from the bourse in response to the latest currency developments.

All of the Zimbabwe Stock Exchange (ZSE)’s indices were in the red after Zimbabwe’s fiscal authorities on Monday moved to end the multi-currency system, and proclaimed the Zimbabwe dollar as the country’s sole legal tender for local transactions through the promulgation of Statutory Instrument 142 of 2019.

The move is part of the Government’s broader drive towards the full adoption of a local currency, but it was also necessitated by an increasing “informal dollarisation” of the economy.

The bourse’s linchpin index, the All Share Index marginally slipped by 0,71 percent to close at 218,06 in the week under review, from 218,77 previously.

The ZSE Top 10 Index was also down, sliding 1,72 percent to 212,45, from 214,17 in the prior week, while the Industrials Index was down 2,08 percent to 727,56, from 729,64 in the prior comparable period.

But the biggest loser was the Mining Index, which fell by a hefty 6,93 percent to 275,71 from 282,64 last week.

However, on a year-to-date basis, all the indices were in the positive, highlighting the fact that the capital markets have been an investment safe haven for both foreign and local investors as economic uncertainties have loomed large over the past number of months.

On a year-to-date basis, the All Share Index was up by 49, 11 percent, while the ZSE Top 10 Index gained 46,50 percent and the Industrials Index was up by 49,36 percent.

But comparably, year-to-date gains for the Mining Index were moderate at 21,08 percent.

Observers anticipate that the losses seen this week are temporary, and the bourse will soon revert to its safe haven status.

Notwithstanding the losses, the ZSE’s market capitalisation bumped by 0,70 percent to $29,1 billion from $28,9 billion during the period under review, buoyed by trades in medium caps.

Trading in medium caps was strong this week as Dawn Properties led the top risers with a 44,05 percent gain to close at $4,84, followed by Dairibord which gained 31,82 percent to close at $29, and General Beltings which rose 20 percent to $2,4.

Other top gainers during the week were Powerspeed and Lafarge, which gained 19,05 percent and 17,70 percent to close at $25 and $138, respectively.

The week’s biggest losses were recorded in First Capital Bank down -26,52 percent to $6,4; PPC, down -18,73 percent to $195; Bindura, down -15,38 percent to $11, Delta Corporation, down 12,78 percent to $340, and RTG, down -11,76 percent to $7,5.

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