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Business Reporter
THE Zimbabwe Stock Exchange market capitalisation has shed 23 percent of its value to $3,94 billion since the beginning of this year, as liquidity continues to choke companies.

ZSE market has maintained downward spiral since the beginning of the year, largely reflecting dim prospects on a stock exchange where very few companies are making good profits.

The ZSE market capitalisation contracted by 2 percent last week to 3,94 billion in a week that saw significant losses recorded in share prices of giants Econet and Delta posted. Trading in heavyweights was mixed with losses recorded in Econet (26,65c) and Delta (83,50c) of 2,91 percent and 1,78 percent respectively and a 0,43 percent gain in Innscor (59c).

Volumes traded totalled 17,74 million shares and averaged 3,55 million shares per day.

Weekly turnover totalled $2,88 million at average daily value of $0,58 million for the week.

Activity was highest in Delta, Econet and Fidelity Life contributing 24,28 percent, 28,83 percent and 19,77 percent respectively, of the total volumes traded in the week.

Persistent economic challenges in Zimbabwe have resulted in over 10 companies either being delisted for violation of rules or voluntarily requesting termination of their listings. A few opted out to pursue restructuring and recapitalisation without having to worry about the costly and stringent listing rules, at a time they were facing liquidity constraints.

Fifty eight companies remain listed and actively traded on ZSE for a stock exchange that once boasted of over 78 stocks after dollarisation of the economy in early 2009.

The market capitalisation of a company is the product of its current market price multiplied by its number of outstanding shares, which depicts the firm’s value on the market.

Outstanding shares are the issued and fully paid up shares out of a company’s total authorised shares while its market price is the price each share is sold for on an exchange today.

The market capitalisation of companies on an exchange is the product of all companies listed on the exchange multiplied by their respective current market prices.

Factors that cause decline market capitalisation include a fall in individual company’s market price, which has a direct bearing on the aggregate market value of a stock exchange.

Delisting of companies (in the case of total market value on the exchange) may also result in decline in the market value of individual companies and also the aggregate market cap.

While the ZSE has been affected by a number of delistings, majority of which happened before 2015, share prices have suffered largely from lukewarm investor confidence.

Tight liquidity in the domestic economy has made it difficult for the majority of companies to increase production or replace antiquated equipment to ensure efficiencies.