THE Zimbabwe Stock Exchange (ZSE) cumulative market capitalisation rose to $3,8 billion last month, the highest in over a year, as foreign investor participation on the bourse improves, official figures have shown.
Report by Bernard Mpofu
In September market capitalisation was at $3,4 billion. ZSE last passed the $3,8 billion mark in September last year.
Market capitalisation represents the aggregate value of a company or stock and is obtained by multiplying the number of shares outstanding by the current price for a share.
ZSE statistics showed that the value of shares bought by foreign investors last month nearly doubled to $20,5 million from $10,7 million in August on the back of an upward trajectory on the mining index. The total number of shares that exchanged hands rose to just over 287 million from 194 million.
Investors, who at the start of the year were net sellers amid fears of an early poll, strongly held their stocks during this period. Stocks worth $6 million were sold by foreign investors in September compared to $9,2 million in the prior month.
Critics attribute the subdued performance of the exchange at the start of the year to uncertainty over the next general elections and lack of clarity on the country’s equity law compelling foreign-owned companies to dispose 51% stake to locals.
In a recent report, the African Development Bank (AfDB) said the resurgence of the ZSE was anchored by growing investor confidence.
“This development might be an indication of a slight improvement in confidence by foreign investors in the local economy after having been alarmed by developments in the implementation of the indigenisation policy, which gathered momentum in 2011 and the talk of elections over the same period,” said AfDB in its latest month review.
Growing activity on the bourse, the AfDB further said, may be a result of a reduction in scepticism in the sector as most mining companies complied with the indigenisation regulations and are more focused on doing business.
The stock exchange is closely followed by investors as it mirrors the health status of an economy.