Mnangagwa fails to charm cautious stock market

THE Zimbabwe Stock Exchange (ZSE) market capitalisation has been trading below $9 billion since January 12, as companies continue to show caution over the new political dispensation in the country.


As of the end of yesterday’s trading, the market cap on the ZSE was $8 656 672 679, up from the $8 648 322 612 last Friday.
Two months ago, the market cap had breached the $15 billion mark.

In an interview yesterday, Stockbrokers’ Association of Zimbabwe (SAZ) vice-chairperson, Arnold Dhlamini said investors were repositioning their business in light of the new dispensation, with a wait-and-see attitude.

“For now, I would say it is natural (time of the year), but I would also say the biggest contribution has been the change in government,” he said.

“A lot of people are now re-projecting their budgets and changing all sorts of things trying to read into the new sort dispensation so as to read into the new narrative that is now coming out. A lot of budgets are now changing. Projections were based on different assumptions but now those assumptions have been put aside.”

Since President Emmerson Mnangagwa was sworn in as the country’s leader on November 24, 2017, the stock market has continued to decline and remains stagnant at low levels, as investors have remained sceptical over Mnangagwa’s promises for reforms. ads Ads

That month saw the main bourse lose over $5 billion with heavy counters such as Delta Corporation losing $2,37 billion, Econet Wireless $1,551 billion and Old Mutual losing $335,44 million on the ZSE.

Despite a myriad of promises made by Mnangagwa to try and lure investors, the main bourse has failed to recoup its former glory.

Analysts point to investors waiting for those promises to be translated into the corresponding legislation and after the national elections.

However, not all is gloomy, as Dhlamini predicts the market to start peaking in mid-February.

“We should see more buying coming back to align to the new narrative as well. But I think the biggest drive will be Delta (Delta Corporation), who reported a good trading update. So naturally Delta and Econet are epicentres of the market. So you will find the effect on most of the counters should start seeing Econet, Innscor, Padenga and Seed Co starting to also go up,” he said.
Dhlamini said SAZ expected a big bump in the main bourse and called this season “the buying season” for those wishing to make returns.

“So this drop is the natural January feel, but also in there is a concoction of people trying to realign themselves to the new narratives on the budget,” he added.

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  1. This headline is misleading. Please have knowledgeable people do the reporting on economic issues.

    Actually the stock market was being driven by lack of confidence and buying stocks was one way of protecting investors especially of taking money out. Now that there is more confidence that is no longer necessary so prices self-correct. For proof check the counters that were being bought. Also compare share price of Old Mutual on ZSE, JSE and LSE. The differential between ZSE and JSE/LSE is now smaller. That reflects more confidence in ZSE jurisdiction (i.e. people don’t expect to loose their money anymore and so are less willing to pay very high premiums to salvage what they can)

    1. I am also shocked by this lack of business knowledge from a business reporter.The truth of the matter is that the stocks were trading at a premium due to the poor macroeconomic environment which was prevailing. Now that investors are expecting the environment to improve stock prices should actually go down not the other way round.

  2. You can coup the old man, but youct coup the economy!

    1. OK do make a lot more sense but what’s with the name? Please change it to something more in line with what is happening around you…This name is so wrong and ugly…

  3. i think this analysis isnt fair economically. its is littered with a lot of political undertones. What had caused the sudden jump from around $4Billion+ in the first place? Was this a result of economic growth a 300-400% leap in the bourse?. I see this as market correction from the wild 15Bn to its proper level of around $5BN.

  4. Self correcting yes ! but when will fresh investment come in if the new dispensation is attractive? There is no one angle answer to this scenario . The writer is looking it from the expected rush to invest in the new zimbabwe and you are explaining the reason for drop from 15 billion to about 9 billion. That is why economics is not a straight jacket situation.

  5. Comment…The unsustainable rush to 15 billion cap was due to inflation in the wake of political uncertainty too.In a situation where you have a 93 year old presiding over one’s investment and bond notes threatening to wipe out your investment and no one is selling their immovable property for one to hedge the stock market becomes a sensible investment both in the short term and long term.All that came to an end so the “legacy” of the stock market is being restored!

  6. Comment…This coup government wont change anything ,they are unrepentant vampires who leave on blood.Cry my beloved country.

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