THE market capitalisation for the Zimbabwe Stock Exchange (ZSE) has shaved off $1,2 billion between January and November this year, official statistics have shown.
BY VICTORIA MTOMBA
Market capitalisation is the total market value of the shares outstanding of publicly traded companies. In January this year the market capitalisation of the local bourse stood at $4,36bn and it has been on a downward trend to November when it fell to $3,1bn.
An analyst from Lyton-Edwards said the turnover and market capitalisation should not come as a surprise given, the performance of the underlying companies that are listed. The analyst said the period was characterised by weakening results, with companies experiencing falling revenues and profitability, as well as investors preferring countries with better returns compared to Zimbabwe.
“It is, however, important to note that the weakening equities market is not only a ZSE issue, as other African markets are also struggling, following weakening of commodity prices. While some markets are positive in their local currencies, they have performed as badly as the ZSE in US dollar terms,” the analyst said.
“Zambia’s Lusaka Stock Exchange was the worst performer as at Friday November 27, 2015, having lost 42,64% in USdollar terms. In Nigeria the all share index was down 26,84%, while the Johannesburg Stock Exchange was down 15,69%.”
The industrial index took off this year at 164,90 percentage points down to 117,55 percentage points in November, while the resources index closed the month of November at 22,33 percentage points after decreasing by more than half since the beginning of the year.
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The mining sector also had its fair share of problems due to the fall in commodities prices.
The industrial index reached its peak in 2013 when it closed at 202,12 percentage points after it began at 151,99 percentage points in 2009, 151,3 percentage points in 2010, 145,86 percentage points in 2011 and last year it was 162,79.
The mining index peak period was in 2010 when it recorded 200,4 percentage points and the lowest figure was in 2013 when it recorded 45,79 percentage points.
In his 2016 National Budget presented last week, Finance and Economic Development minister Patrick Chinamasa said the ZSE had remained depressed since the beginning of the year due to illiquid conditions and high trading costs among others.
“The ongoing efforts by government to grow the economy, underpinned by positive sentiments arising from accelerated re-engagement with the international financial institutions, augurs well for the recovery of the market activity at the ZSE from 2016,” he said.
