The Zimbabwe Stock Exchange registered an improved performance last month with turnover and value rising by 38,4 percent and 54 percent, respectively. While activity picked on the stock market in February, as both turnover and volume of shares traded trended up, market value maintained a downward spiral. The change of fortune provides a glimmer of hope that stocks may offer moderate returns after the blood bath experience of last year and early 2016.
The ZSE’s market capitalisation is already 11,42 percent down for the year and market watchers forecast the market to retrace its steps only 15 percent this year. During a forgettable year for the stocks, ZSE’s market capitalisation plunged to $3 billion as at December 31 from $4,3 billion in January 2015.
Tight liquidity and generally tepid commodity prices, the bulk of Zimbabwe’s exports, suppressed corporate earnings and investor sentiment in stocks. The Industrials Index had opened 2015 at 167,16, but dropped to 114, 85 by year end. The resources index on the other hand dropped to 23,72 from 55,38.
Due to the sustained weakness in the stocks, ZSE market capitalisation ended the month of February 3,24 percent weaker at $2,85 billion compared to January. Turnover rose 38,44 percent to $15,73 million while average daily trades for the month came in at $749 000. Volumes traded totalled 95,8 million shares.
Econet, Delta and Afdis accounted for the highest contribution to the value of shares traded on the bourse at 40 percent, 35 percent and 6 percent, respectively. There was little joy though in terms of the performance of the main industrial index, which dropped 3,4 percent to close the month of February weaker at 99,5.
The index was largely weighed down by losses in cigarette manufacturer, BAT and telecoms giant Econet, which offset good gains in beverages maker, Delta. ZSE, a key indicator of economic performance, has continued its wobbling from 2015, when the economy grew by 1,5 percent from initial forecast of 3,2 percent.
With softening prospects for global economic performance on account of weak commodity prices and slow growth in China, growth is seen at 1,5 percent in 2016. But the coming months may just bring the much craved for good tidings, as many companies start reporting their results for the financial to December 2015.
“We expect to see continued pressure on the consumer space, as companies grapple to improve efficiencies and enhance margins amidst lower spend and downward pressure on pricing from cheaper imports,” IH securities said.
The market watchers said that they have noted return of confidence in the banking sector as reflected in the quality of earnings released by banking stocks.
This is attributed to the de-risking of the financial services market through acquisition of non-performing loans RBZ special purpose vehicle, ZAMCO.