ZSE: The big market rally out of nowhere

Nobody expected it. I certainly didn’t. At least not anytime soon. The big stock market rally came from nowhere!

Just two weeks ago, those who had been buying the dip looked stupid. The dip kept on dipping. A stockbroker friend warned, don’t panic buy, the bearish trend is here for longer.

One would believe him. He is an expert. But not in this market, it’s unpredictable. Its next move is not known.

The big stock market rally came from nowhere!

When the market was falling, market watchers and analysts shared their opinions.

I did too. Monetary and fiscal policy measures had killed the market some said.

For others, it was institutional investors selling shares to pay off their Zimbabwe dollar debts.

Interest rates had been hiked to a minimum of 200 percent. Too expensive for anyone to contemplate borrowing. Too expensive for those who were already borrowed.

The alternative, many agreed, was to sell shares. It seemed the easier option. The market kept on dipping. The bearish trend would probably last till after elections next year, some thought. But the big stock market rally came from nowhere!

From a peak of plus $3,6 trillion sometime in May the market kept falling. On Wednesday last week, it had fallen to $1,2 trillion.

Collectively the market was looking cheap. Specific companies, with strong fundamentals, were looking ridiculously cheap. But the dip kept on dipping.

On Thursday last week, the stock market closed positive. A dead cat bounce, many thought.

I was hopeful. The previous day (Wednesday) I had submitted last week’s edition of this column. I titled it: “ZSE: We’re most likely in the bottom-up period.”

In it I wrote: “There are however, some stocks that are now at a huge discount. It’s a bargain hunter’s paradise.

“Even as bad as things are, good businesses will still be able to recover and
grow.”

I was hopeful for long-term recovery and I wrote: “The most important thing for investors is to look for companies that could grow volumes and are profitable amid the volatile, uncertain, complex, and ambiguous environment.”

I was however, not entirely certain when that recovery would come. I was not sure whether that recovery would be a hockey stick recovery, a U-shaped one, or a V-shaped one.

So I wrote: “That growth and value creation will offset whatever downside that is still to come”

But there was no longer any downside to come. The big stock market rally came from nowhere!

As I wrote this article on Wednesday, the ZSE market capitalisation had gained 49,69 percent from the previous week. Its value now stood at $1,85 trillion.

Up from the previous $1,23 trillion the previous Wednesday.

Ecocash had gained 100,38 percent during the same period. SeedCo followed with a 94,52 percent gain. Innscor, Delta and Econet were all above 82 percent.

The big stock market rally came from nowhere!-ebusinessweekly