Foreigners stick it out on the ZSE

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The Zimbabwe Stock Exchange trades were skewed negatively for much of the first quarter as fundamentals remained weak to negative. The country’s economy is weakening by the day amid reports that companies are closing shop, while others are retrenching and downsizing operations. Consumer demand has also been on the decline amid waning disposable incomes.

The country’s revenue collector, ZIMRA, recently warned about the worsening situation, with the Commissioner General, Gershem Pasi, adding “things are not well out there and we have predicted that until and unless we can have some inflow of some revenue (funds) into the economy, we may be heading for a serious shrinkage of revenue.”

In total, ZSE turnover for the period amounted to $118.6 million, slightly lower than the $120.4 million that was invested in the first quarter 2013.Foreign investors continued to dominate, contributing more than 67% of the market’s total turnover of $118.6 million for the first quarter. This is an improvement from a foreign contribution of 62.7% last year comparative. Foreign investors bought shares worth $79.4 million, and sold shares worth $47.3 million, resulting in foreigners being net buyers of shares worth $32 million. Interestingly, foreigners have actually increased their portfolio investments into the country, having bought shares worth $79.4 million, against $75.6 million they bought during the same period in 2013.

Prices on the local bourse have, however, been tumbling throughout the year with approximately 44 stocks trading at prices lower than their open-ing prices this year, and 16 of these stocks are down by at least 30%. This resulted in the Industrials Index losing 12.76% in the first quarter, while the Mining Index fell further to lose 35.55%.

Major fallers for the period under review were Pelhams down 90% to 0.01cent, Cottco down 81.67% to 1.1 cent, Hunyani down 50% to 1 cent, Hwange down 44.44% to 5 cents and CFI down 38.89% to 2.2 cents. Big cap stocks were also mostly negative with Delta losing 17.91% to 115.01 cents, BAT was down 8.33% to 1100 cents, Innscor down 22.25% to 62.2 cents and Meikles down 13.16%.

A few big caps, however, recorded gains with Econet picking up 3.53% to 62.12 cents, CBZ up 6.67% to 16 cents, Old Mutual up 0.79% to 255 cents and National Foods up 7.5% to 215 cents. The top risers were: Art up 100% to 0.4 cents, Pioneer up 66.67% to 5 cents, Zimpapers up 25% to 1 cents and Ariston up 23.60% to 1.1 cents.

Our thoughts: The economic situation in Zimbabwe is deteriorating very fast, and we are now at a point where hard decisions have to be made. We believe the economy has reached a point where government has to take radical measures in order to stimulate the economy. ZIMRA has al-ready intimated that unless we can generate inflow of revenue into the economy we may be heading for a serious shrinkage of revenue. Can government afford to keep the status quo? Your guess is good as ours, but we believe it’s time government consulted key stakeholders both local and foreign to formulate policies that are investor friendly. We believe the country owns an abundance of resources that can be leveraged to catch investors attention again.

By |May 8th, 2014|Categories: Research|

About the Author:

Kudzanai Sharara
Kudzanai’s background in financial journalism with ZFN, combined with a continuing education in financial management, provide a solid grounding for his work in the research department.