OVER $800 million in shareholder value was lost on the Zimbabwe Stock Exchange (ZSE) in 2014 as the bourse took a battering from the declining economic environment, latest statistics show.
The stock exchange shows the health status of an economy and its performance is closely followed by investors.
Latest statistics show that ZSE’s market capitalisation closed the year at $4 327 059 384 down from $5 203 129 775 in the comparable period in 2013.
This meant that $876 070 391 in shareholder value was lost in 2014. It was by all accounts a tough year for the bourse as the value of shares that exchanged hands dipped 6,7% in 2014 to $452 865 752,17 from $485 719 802,03 in 2013 despite the increase in the volume of shares.
The number of shares that exchanged hands went up to 3 179 300 954 last year from 2 996 886 088 in 2013.
The industrial index slipped 19% to 162,79 points in 2014 from 202,12 points in the previous year.
The mining index, however, bucked the trend firming by about 57% to 71,71 points. In 2013 the mining index was at 45,79 points.
Analysts say the stock market lacks depth as the current list of actively traded counters was narrow by international standards militating against the luring
of huge investments on the bourse.
ZSE trades at between 10%-11% in liquidity ratio — which is turnover divided by market capitalisation — against the standard benchmark of 50%.
This means that, for instance, an investor with $2 billion would not be able to buy shares on ZSE.
This has resulted in some investors opting for bigger markets like South Africa, Nigeria and Kenya.
Analysts say trades on ZSE are set to increase following the implementation of the central securities depository to speed up the settlement of transaction to T+5 (transaction plus 5 days) from T+7 (transaction plus 7 days) that was in existence.
In addition, the bourse is also working on an automation programme to improve efficiency.