THE Zimbabwe Stock Exchange (ZSE) closed 2023 among Africa’s best bourses after rising by 982% as investors took advantage of a weakening local currency to own chunks of big companies, according to Harare based advisory, Equity Exis.
In a report titled ZSE and VFEX (Victoria Falls Stock Exchange) 2023 Performance Review 2024 Outlook, Equity Axis draw parallels between a bourse that defied a mid-year shift from equities to property and a Zimbabwe dollar that plummeted 88,8% during the period, as economic troubles mounted.
“The mainstream ZSE All Share Index garnered a nominal growth of 982% in 2023, ahead of 80% posted in 2022,” Equity Axis said.
“The ZSE largely followed an upward trajectory in 2023 month-on-month, with 11 out of 12 months recording a positive outturn in nominal terms. The month of July registered the worst performance, dipping -33% owing to the impact of policy changes in May and June respectively. The disparity between a nominal growth of 982% and a real-term growth of 21% is attributed to a very poor currency performance, which was the second worst performing in the world. The ZWL (Zimbabwe dollar) depreciated by -88,8% against the US$ in 2023, second to (the) Lebanese pound, which shed off -89,9%,” the report noted.
Equity Axis said the ZSE reported a historical best performance in May, after its main index firmed by 161%, driven by a flight to safer territory following jitters over haste policy shifts that came through midday, as authorities battled to stem volatilities.
Confronted by a sea of headwinds, policymakers raced mid-year to float the exchange rate and introduced the foreign currency auction system to help markets access cheaper forex.
In the aftermath of the changes, the formal exchange rate firmed, battering Zimbabwe dollar indexed assets including stocks.
“This explains the staggering -30% decline in the All-Share Index in US$ terms in June 2023, which is unprecedented,” Equity Exis noted.
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“Before this sharp plunge, the bourse had risen 44% year-to-date as of May 2023, which was on course to recoup prior year’s losses of -71% as aforementioned. In July, the market dipped in both US$ and nominal terms. The currency fluctuations reversed the positive trend before later mildly recovering in August,” the report added.
