THE Zimbabwe Stock Exchange is now trading at levels last seen in April 2009 as investor sentiment remains weak in the absence of stimulus for a strong move in the positive direction.
On Tuesday, ZSE shares fell below the psychological 100-level when the Industrials Index closed at 99,80, the lowest level since April 30, 2009.
At the close of yesterday’s trades, the Index had lost a further 0,41 percent to 99,39. The lowest levels were recorded in February 2009 when the ZSE re-opened after it had been closed in the hyperinflationary period.
The Minings Index closed unchanged at record lows of 18,74. The transaction value also remains low with stockbrokers currently struggling to meet the psychological $1 million.
Yesterday, turnover was $769 704. Foreign inflows were at a paltry $4 092 while there was a foreign sell-off worth $690 186.
Low turnover levels overall impact on the viability of the stock market industry from stockbrokers, ZSE secretariat and the Securities and Exchanges Commission of Zimbabwe.
At times, monthly revenue which accrues to stockbrokers after rebates is as low as $300 000.
While globally stock markets are currently a tough sell, moreso in emerging markets, in Zimbabwe sentiment is also being influenced by a mixture of poor company fundamentals (declining earnings), low liquidity among local institutional investors and the general economic environment.
Based on history, reported company earnings are expected to be in decline over the next three years. This will put pressure on the stock market.
Investors have developed fatigue while asset managers and pension funds are opting for fixed return instruments. There are also concerns that it is expensive to trade on the ZSE compared to other regional markets, a situation which Finance and Economic Development Minister Patrick Chinamasa said will be addressed by the new board which is being chaired by Caroline Sandura.
Activity on the bourse remains concentrated on a few counters. OK Zimbabwe dominated the trades yesterday with a transaction value of $399 991 and Innscor was at $206 452. Both the counters traded flat. Cafca led the fallers losing 19,9 percent to 32,05 cents ahead of its annual general meeting while BAT which is set to kick start the results briefing season today dropped 2,1 percent to 1 150 cents.