September brings cheer to ZSE investors

They might not be smiling anymore, but stock market investors, at least those who bought the dip, enjoyed the mini-rally that took place on the Zimbabwe Stock Exchange in the second half of the month of September.

The mini-rally saw the ZSE market capitalisation increase by 8 percent from the preceding month, to end September at $1,81 trillion.

The same positive trend was also to be enjoyed by ZSE listed Exchange Traded Funds as their overall market capitalisation was up 5,13 percent.

In fact, the gains were across the board with the ZSE All Share Index inching 7,78 percent in the month under review, to land at 14 771,65 by the close of the month.

The rally was aided by strong demand for equities in the market during the final two weeks of the month.

Blue-chip counters were the most favoured with the ZSE top 10 Index gaining a massive 11,34 percent during the month.

The question most people asked was what was behind the market’s rally. I would hazard to say the market had become too cheap. Stocks were derated in real terms. Some stocks were even negative in terms of local dollar year-to-date movements.

This is at a time the parallel market rate had moved by more than 350 percent since the beginning of the year.

Buyers were buying the dip at a time sellers were now finding it unreasonable to sell. The market is about buying low and selling higher after all.

In terms of turnover, September received one of the lowest. Only $4,9 billion was invested, a 46 percent drop from the previous month. The rally was thus not supported by volumes as sellers stayed away from the low prices.

The top five traded companies during the period under review were Delta which got $1,27 billion), Econet $711,96 million, Innscor $672,24 million, OK Zimbabwe $561,45 million and Simbisa $429,50 million.

The total turnover for these top companies contributed 73,82 percent of the total turnover for the month.

September also coincided with the midyear reporting season.

Under normal circumstances you would expect the market to react to the results positively or negatively.

But the numbers are probably not making any sense. Multiple exchange rates and high inflation levels that have characterised the economy for several years have made the accuracy of financial reports questionable and their usefulness debatable.

Due to the multiple exchange rate
environment, most financial reports carry qualified audit opinions which entails that the financial reports cannot be relied upon and as such cease to serve their purpose — which is to guide investment decision making.

The ZSE has since turned south again, but the recent mini-rally must have taught us that when the market turns, it usually does so in a quick and material manner and, in order to benefit from this, it is important to have skin in the game and stay in the chase wherever possible.

Over at the Victoria Stock Exchange the overall value was 4,03 percent positive at US$341,7 million.

Since the beginning of the year the VFEX has gained 31,5 percent.

The VFEX All Share Index started the year at 109,69 and has since gained to 143,16 as at the end of the period under review. A total 128 059 407 shares valued at $9 million have changed hands during the period.

There are four counters listed on the VFEX with Padenga, which is into gold and crocodile skin production being the best performer.

By September 30, 2022, Padenga had gained 71,4 percent year-to-date while Seed Co International had put on 42,4 percent for the same period. Bindura was a negative 44,4 percent while Caledonia was unchanged.-ebusinessweekly