ZSE turnover takes a knock

DAILY turnover on the Zimbabwe Stock Exchange (ZSE) plunged to nearly $200 000 on Monday from an average of $1,5 million as election talk grips the markets, analysts have said.

Report by Bernard Mpofu

This is the first time since January 7 that the value of shares that exchanged hands on the ZSE had reached its lowest levels.

At the weekend President Robert Mugabe said elections are looming as the life of the current inclusive government would come to an end by June 29, a move that rattled investors.

Official statistics show that a total of 893 000 shares valued at $198 000 exchanged hands compared to $2,98 million recorded in the previous session. On a month-on-month basis the value of shares traded were 40% down. Mark watchers attribute the emerging trend to growing anxiety over the next general elections expected to mark an end to the inclusive government formed in 2009.

The mining Index closed flat after no trades were recorded in the four-counter Index which remained at 71,09 points. Heavyweights Delta, Econet and Innscor recorded marginal advances to support a humble 0,8% gain on the mainstream Industrial Index which closed at 192,68 points.

The low turnover levels is a blow to the majority of the stockbrokers who have been fighting for crumbs as the market is controlled by five brokerage firms.
Experts say with stockbrokers charging 1% commission on each side of every trade, the future of independent stockbroking firms could be bleak given the subdued performance of the ZSE over the last three years.

Market players contend that nearly 80% of the trade on the ZSE are handled by at least five brokers, which means these could have taken the biggest chunk of the commission.

The five firms — Lynton Edwards, Imara Capital, MMC Capital, EFE Securities and Old Mutual — had since dollarisation of the economy been the more dominant players on the exchange.

Despite recording remarkable slump in turnover, the main index, up more than 25% this year, hit a record high of 191.16 last Friday driven by foreign investors who have been strong buyers since the adoption of multiple currencies in 2009.

Experts also contend that apart from the election talk, lack of clarity on government’s policy of forcing foreign-owned firms to cede majority stakes to black citizens is also deterring larger portfolio inflows and the much foreign direct investment which at peak in the 1990s accounted for 25% of the gross domestic product.

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