The Zimbabwe Stock Exchange (ZSE) has shed nearly $1 billion in the last 12 months, as investors continue to be jittery about the impending general elections and the ongoing indigenisation programme.
According to the Africa Development Bank (AfDB) monthly economic review for June, “. . . market capitalisation took a huge knock of $840,2 million from the $4,2 billion May 2011 figure down to $3,4 billion.
“This has basically been on the back of cautious trading by both foreigners and locals pending a clearer path the country is taking on indigenisation and elections,” reads part of the report.
AfDB said the stock market continued on a subdued trend which began in the last quarter of this year.
The mining index fell to below half its level compared to the same month in 2011. In May 2011, the index averaged about 200 and has been averaging below 100 in 2012.
“This trend has been a result of cautious trading on mining counters by investors developing a wait-and-see attitude pending the clearance of uncertainties regarding the implementation of the indigenisation policy in the sector,” AfDB said.
The industrial index fell, though by a lower margin than the mining index, from an average above 150 in May 2011 to about 130 in May 2012.
According to the AfDB, indices have been tracing the overall performance of the manufacturing and financial sectors, which have been hamstrung by liquidity constraints on the domestic market. However, the overall performance of the stock market made some positive moves in terms of turnover volumes and values, which recorded gains of 49,7 million shares and $12,7 million, respectively.
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“Several factors threaten the achievement of the economic growth target for 2012.
“These include, among others: liquidity constraints, underperformance of the mining sector in the first quarter of 2012 and, electricity shortages,” reads the report.
Despite the decline in the number of shares bought by foreigners to 64,4 million, their value increased by $5,5 million, an indication of the increase in the average price of shares for comparative months.
A local brokerage firm MMC Capital last week projected the delisting and suspension of more ailing companies trading on the bourse as debt continues to choke quoted firms.
In its weekly update, AfDB said foreign investor appetite for ZSE blue chips and some mid-cap counters would remain high while penny stocks would struggle to remain afloat. The number of listed counters dropped to 72 from 74 last week following the suspension of Interfin and Gulliver from trading on the ZSE.
