Equities market displays strong performance
The equities market had robust performance for June with the Zimbabwe Stock Exchange’s (ZSE) market capitalisation in local currency terms surging 31,24 percent to ZiG37,51 billion with policy changes fostering investor confidence.
The operating environment offered some positive signs.
Month-on-month inflation for June registered at -0,2 percent, an improvement from the -0,6 percent recorded in May. Additionally, official statistics show the creation of 200,000 jobs in the first quarter of 2024, suggesting an improving labor market.
Government also introduced a gold-backed currency known as the Zimbabwe Gold (ZiG) in April this year.
Post introduction of the ZiG currency, the ZSE has gradually built-up activity with the market and is currently on a growth trajectory, market watchers have noted.
According to IH Securities, the ZSE has seen a gradual increase in activity, and the recent removal of the 180-day vesting period for investors and the standardisation of capital gains withholding tax are expected to further boost liquidity.
In real US dollar terms, the ZSE registered a 32,67 percent growth to US$2,05 billion compared to May.
The growth was driven by heavyweight counters, with the Top 10 Index climbing 34,53 percent.
During the month, trading activity also saw a significant boost, with a total of 183,13 million shares changing hands – a staggering 250 percent increase from May.
EcoCash was the star performer, with a foreign investor offloading a large block of shares (138 million) to a local manufacturer in a series of block trades.
The fintech group recorded a significant decline in profitability for the year ending February 29, 2024 as after-tax profit shrunk by a staggering 75 percent to $68 billion compared to $278 billion achieved in the previous year.
Sugar processor -Star Africa and ART, rounded out the top three most traded stocks on the ZSE.
Elsewhere on the US dollar denominated exchange, the Victoria Falls Stock Exchange (VFEX) showed positive signs of recovery in June. Its total market capitalisation rose 5,48 percent to US$1,25 billion.
The All-Share Index gained 5,58 percent, with eight out of 10 counters trading in positive territory. Zimplow was the month’s top performer, with a 57 percent increase. Zimplow, however, had a bad five-month period to May 30, 2024 as both domestic and volume performance remained sluggish due to the adverse impacts of the El Nino induced bad weather across the Southern Africa region.
Despite the growth in market capitalisation, liquidity on the VFEX remained subdued, dropping 12,46 percent to US$3,49 million.
Innscor and Simbisa were the value leaders, while First Capital contributed the most to traded volumes. Despite the lower liquidity, a steady pipeline of new listings is planned for the VFEX, including Bridgefort Capital, The Mosi REIT, and Eagle REIT, which are all expected to boost activity on the US dollar denominated exchange.
IH Securities says while the environment is presenting positive signs for the equities market, there is still need to exercise caution. The research firm picked Dairibord on the ZSE and Simbisa on the VFEX as the stock picks for the month.
“Simbisa is a consistent dividend payer, guaranteeing a return even in the absence of capital gains,” said IH Securities.
Simbisa is a cash operating business, with 86 percent of its operational cashflows being cash, which positions the group to finance capex without a heavy burden of finance costs.
Overall, the outlook for the Zimbabwean stock market appears cautiously optimistic, with continued growth expected in the coming months.-ebusinessweekly
