Zimpapers Logo

Business Reporter

The equities market closed positive in 2019 yielding a 57 percent gain as investors turned to stocks as a safe haven for investment.

The year was characterised by economic volatility mainly due to inflationary pressures, which helped push demand for stocks as other investment channels such as the money market became unattractive.

Currency reforms were among the top highlights for the year which saw the Reserve Bank of Zimbabwe establish an interbank market for foreign currency, introduction of local currency and banning of foreign currency for local transactions with the exception of other sectors such as tourism.

The conversion from a multi-basket of currencies to a local mono-currency meant an increase in local dollars’ liquidity, which found its way on the stock market.

However, the policy changes also had a knock on effect over investor confidence as the market witnessed a wait and see attitude by foreign investors.

Resultantly, foreign participation accounted for only 13 percent of total turnover, which was the lowest in a decade.

Market watchers contend that the market has been grossly undervalued.

“We believe from a general net asset valuation most companies show sharp upside while from a ratio perspective the upside is even higher,” revealed analysts at Equity Axis.

During the period under review, all the benchmark indicators closed the year in the black. The ZSE All Share Index and the Industrials Index both rose by 57,3 percent to 230 points and 766 points respectively.

The market’s top cap counters, the ZSE Top 10 Index advanced 39,76 percent to close the year at 202 points as all its counters closed in the black with the exception of Cassava, which lost 2 percent of value to close the year at $1,40.

On the resources side, the Minings Index advanced 39,06 percent to 316,6 points on gains in its three active counters, Bindura, Falgold and RioZim.

The bourse has since introduced new indices effective January 2, and these are expected to provide the market with better tools for performance measurement as well as assist in sector-based investment strategies.

Of the 59 active counters, 57 closed the year in the positive while only two closed in the negative, that is Cassava and seed producer, Seed Co Limited which eased 8,4 percent to close the year at $1,90. Zeco remained unchanged at 0,02 cents.

MedTech, Ariston, RTG, ZHL and Meikles were the top five performers in that order.

This year, stocks are seen surging on the back of a slowdown in sales volume loss as was the case in 2019 and a further re-rating based on exchange rate weakness.