Tapiwanashe Mangwiro Senior Business Reporter
The Zimbabwe Stock Exchange (ZSE) outperformed the rest of sub-Saharan stock exchanges on investment returns in US dollar terms last year after its market value grew by 153 percent.
The bourse ranked first among stock markets which had a year-to-date US dollar returns above 20 percent as at 31 December 2021, latest report shows
Market watchers believe that frenzied interest in equities in investment is driven by lack of investment options due to currency issues. Zimbabwe’s economy is characterised by lack of dollar assets and exchange rate movements have forced investors to seek hedge options in which case they have found ready n equities to duck inflation darts.
“I think in the last few years the driving factors have been hedging against inflation and the low cost of local currency borrowings,” said economist Yona Banda.
While experts assert that the Zimbabwean dollar “lacks the oomph,” authorities have been unflinching on their position about the local currency; it is “here to stay.” Yet, in spite of adopting this uncompromising stance, Zimbabweans are presently buying and stocking the US dollars which they see as a stable store of value.
At the time of writing, the Zimbabwe dollar was trading at $200 to the US dollar on the black market. Previously the treasury chief said the Government was implementing the necessary policy measures to ensure that inflation is back on the single digit desired path.
This includes a review of the current foreign currency auction system, further tightening of monetary policy and curbing malpractices in the financial sector. Zimbabwe’s annual inflation was projected to end 2021 between 52 percent and 58 percent.
Zimbabwe topped the list of SADC exchanges in terms of dollar returns after it paced 153,3 percent, followed by Zambia at 96,7 percent, Seychelles at 44,2 percent and Ghana at 38,3 percent. The BRVM Côte d’Ivoire came in at 29,3 percent while Malawi completed the list with 27,7 percent.
“13 of the fourteen SSA (minus) South Africa stock markets have positive US dollar returns year to date. In US dollar terms SSA excluding South Africa markets were up 0.5 percent in December and up 10,2 percent year to date,” African Financials said in its December 2021 Top 30 Equities Valuation Report.
As the year closed in December, markets that also saw growth included Mauritius which went up 4 percent, the BRVM that grew by 3 percent and Kenya, which was up 1 percent.
Markets that saw declines included Nigeria which went down 1,2 percent, Ghana receded 2,3 percent and Zimbabwe down 4,4 percent. The market capitalization of the Top 30 companies for December 2021 was US$111bn, up 1,7 percent in November.
On currencies, the report revealed that the South African Rand in December fell marginally by 0,4 percent against the US$ and regional currencies were stable. The Zambian kwacha rose 6 percent and has appreciated 26 percent following the July elections.