ZSE on growth trajectory
The local bourse, Zimbabwe Stock Exchange (ZSE), maintained a growth path during the six months to June 30, as investors cheered the policy interventions to bolster economic stability and growth.
The key highlight during the half year period included the introduction of the gold-backed ZiG currency by the Reserve Bank of Zimbabwe (RBZ) in April to address currency volatility, inflationary pressures and a general economic stability.
According to the apex bank, there are positive signs already noted with the introduction of the currency, for instance its continued acceptance by businesses and individuals.
This ZiG acceptance, according to the RBZ is seen as a crucial step towards achieving macroeconomic stability, and Deputy Governor Dr Innocent Matshe, said the central bank remains committed to implementing policies aimed at further enhancing the currency’s position in the economy, with its general acceptance playing a critical role in economic stability.
The positive signs are also seen on the equities market, with the ZSE All Share Index surging by 27 percent, propelling the market capitalisation to ZWG39 billion (US$2,8 billion).
This robust performance is attributed to increased investor confidence spurred by recent economic stability.
However, the Victoria Falls Stock Exchange (VFEX), primarily trading in US dollars, has shown more modest gains due to persistent liquidity constraints.
While the market is expected to improve in the second half of the year, fueled by rising remittances, it remains cautious.
Apart from currency interventions, positive reforms, such as the removal of the 180-day vesting period and standardised Capital Gains Wealth Tax (CGWT), are anticipated to further boost ZSE trading.
Coupled with low inflation, the Zimbabwe dollar-denominated bourse is poised for significant growth.
Counters like Delta are expected to drive growth.
“Given its strong business model with diversified product lines, fairly liquid share and a consistent record of paying dividends, Delta remains attractive as a long-term investment,” said FBC Securities.
The group’s volume trajectory remains strong.
“We anticipate improved volume performance in the second half of the year supported by US dollar pricing, improvement in wages and salaries across various sectors, diaspora remittances, increased mining activity and Government spending on infrastructure projects,” said FBC Securities.
On the REIT market, Tigere REIT has become a highly lucrative investment vehicle on the bourse, with a record 100 percent occupancy level for all its properties.
The REIT has also managed to pay out dividends per every quarter since its listing in late 2022.
“We anticipate improved performance of the REIT if it successfully acquires Highland Park Phase 2, which was officially opened for trading in December 2023, and is reported to have an extensive waiting list of tenants for the available spaces. The REIT therefore remains a viable long -term investment for investors,” said the research firm.
Despite these positive developments noted in the half year period, the broader economy faces significant challenges. The El Nino-induced drought, power shortages, and a weak global economic environment have dampened growth prospects.
The Ministry of Finance forecasts a modest 2 percent GDP growth in 2024, recovering to 6 percent in 2025 and 2026.
Market watchers opine that while inflation has cooled down, the banking sector remains cautious with lending rates increasing due to limited demand deposits. Dollarisation continues to rise as economic agents seek stability.-ebusinessweekly
