THE country’s two stock exchanges have experienced mixed fortunes this year, with the Zimbabwe Stock Exchange (ZSE) struggling to regain lost ground during the last quarter of this year, a new report showed this week.
Headwinds have continued to defy several measures rolled out by policymakers to stem capital flight, but the Victoria Falls Stock Exchange (VFEX) has responded positively, the report by the Zimbabwe National Chamber of Commerce (ZNCC) said.
The ZSE’s market capitalisation reached a high of ZW$3,5 trillion (US$22 billion) in April 2022 before tumbling to ZW$1,82 trillion (US$5,9 billion) a month later, after a range of interventions by authorities triggered capital flight.
Treasury in May increased capital gains tax on shares held for 270 days or less to 40%, as part of measures to encourage long-term investments into stock markets.
Previously, the capital gains tax rate on sales of stocks was set at 20% for all transactions.
For long-term investors of more than 270 days, the capital gains tax stayed at 20%.
Research company Morgan&Co cautioned at the time that the new policies would reduce trading activity on the local stock market and raise trading costs following the hike in capital gains tax.
The benchmark ZSE All-Share Index increased by 42,24 points to close at 13,771.09 in the week ending November 22, 2022, according to the ZNCC, in its 2022 State of Industry and Commerce Survey Report.
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The ZNCC said as at November 22, the ZSE’s market capitalisation was ZW$2,06 trillion, which, translated to about US$3,4 billion.
“The volume performance of the top 10 counters on the ZSE shows a much better performance for the period between August and October 2022 relative to the period between May and July 2022. For some counters in the weekly top ten, share price changes are being carried by higher trading volumes,” the ZNCC said.
It showed that a liquidity crunch spell was experienced mostly during the third quarter following an aggressive mop up operation by the central bank through gold coins, along with an interest rate hike. The report said despite the launch of gold coins, the ZSE and the VFEX remained popular destinations for investment.
“Despite most counters receding in terms of share prices as a result, volume performance among the weekly top ten remains largely elevated on the ZSE. Inflation and continued exchange rate depreciation largely explain this performance,” the ZNCC added.
There are still 55 counters on the ZSE and five Exchange Traded Funds (ETFs).
Finance minister Mthuli Ncube said in 2023 budget that the ZSE was close to acquiring a market surveillance system to ensure the implementation of steps to stop stock market manipulation and other illegal practices.
As of October 31, 2022, market capitalisation on the VFEX stood at US$341 million, a 76% rise from the comparable period in 2021.
The VFEX All-Share Index increased by 27% from January to October 2022, reaching a high of 138,8 points on August 31, 2022.
The entire market turnover on the VFEX increased significantly over the same period in 2021, hitting US$8,88 million, the report noted.
