Trading declines at ZSE

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Trading on the Zimbabwe Stock Exchange continues on a downward trend largely due to market illiquidity challenges that gripped the country in the first half of the year.
Market capitalisation fell from US$3,97 billion in January 2010 to US$3,19 billion by end of June 2010.
Corporate results have reportedly failed to uplift the equity market as most corporates are still undercapitalised and also suffering from subdued demand.
Presenting the mid-term 2010 budget review yesterday, Finance Minister Tendai Biti foreign participation on ZSE has remained subdued with investments mainly confined to portfolio restructurings.
Of the companies that sought recapitalisation mainly through rights issues, shareholder support averaged 50% with the balance being taken over by the underwriters.
“The industrial index which started the year at a high of 156,52 had dropped to 127,46 by June 2010, whilst the mining index fell from an opening of 209,8 to 143,08.
“The poor performance is as a result of investors pulling out their investments reflecting depressed investors’ sentiment over perceived financial risks, especially following gazetting of the Indigenisation Regulations on March 1,” Biti said during his statement.
Foreign investors’ contribution to market turnover fell from between 40-50% to an average 20%t per month.
Biti said the current ZSE “open cry” manual trading system represents risk of human error, settlement delays and undermine market confidence adding that ZSE would establish an automated trading platform by end of the year.