THE country's stock market took a hit in November, with the Zimbabwe Stock Exchange (ZSE) experiencing a 32% decline in total market capitalisation, businessdigest can report.
This was partially caused by a perfect storm of undervalued stocks and stagnant price adjustments, according to leading securities firms.
The All-Share Index, which tracks the performance of all companies listed on the bourse, dropped by 8,31%, driven by significant losses in the Top 10 and Top 15 indices.
Conversely, the Medium Cap Index gained 2,26%, and the Small Cap Index remained unchanged at 100,11.
Monthly turnover stood at ZiG287 million, with Delta and Econet as the main contributors.
“This represents a significant drop from October's turnover of ZiG503 million, primarily driven by Delta and Econet,” Fincent Securities said in its November report.
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“We expect market capitalisation on the ZSE to rise as liquidity conditions steadily improve.
“Many significant counters remain undervalued and are yet to adjust their pricing to reflect true fundamental values. Delta and Econet are poised to continue playing a pivotal role in driving liquidity on the local bourse.”
In the period under review, CFI Holdings emerged as the top gainer with an impressive 48,65% increase, despite trading shares worth only ZiG21 386 during the month.
Proplastics, Cafca, Willdale, and First Mutual Properties also posted notable gains. On the losing end, CBZ saw the steepest decline at -31,84%, followed by OK Zimbabwe, Econet, Meikles, and Nampak.
On the Victoria Falls Stock Exchange (VFEX), market capitalisation dipped by 0,32%, and turnover fell by 6,7% to US$3,5 million.
To contain inflationary pressures, the central bank increased the local benchmark rate from 20% to 35%.
Further, the bank tightened both ZiG and US dollar liquidity by instituting higher reserve requirement ratios, while the Finance ministry has turned its focus on containing government expenditure and increasing taxes on discretionary consumer spend.
While this will keep ZiG liquidity constrained, Morgan&Co noted temporary spurts on the local currency liquidity that will be consistent with Treasury disbursements throughout the year.
And that will be felt on the ZSE.
“Liquidity on the VFEX will likely increase, albeit slightly because of the strong demand for US dollar in day-to-day business operations,” it said.
“Improved dividend pay-outs stemming from increased economic activity will be a major source of liquidity on this bourse.”
- The exchange rate as at November 29, 2024: US$1: ZiG25,45