THE Zimbabwe Stock Exchange (ZSE) closed 2023 among Africa’s best bourses after rising by 982% as investors took advantage of a weakening local currency to own chunks of big companies, according to Harare based advisory, Equity Exis.
In a report titled ZSE and VFEX (Victoria Falls Stock Exchange) 2023 Performance Review 2024 Outlook, Equity Axis draw parallels between a bourse that defied a mid-year shift from equities to property and a Zimbabwe dollar that plummeted 88,8% during the period, as economic troubles mounted.
“The mainstream ZSE All Share Index garnered a nominal growth of 982% in 2023, ahead of 80% posted in 2022,” Equity Axis said.
“The ZSE largely followed an upward trajectory in 2023 month-on-month, with 11 out of 12 months recording a positive outturn in nominal terms. The month of July registered the worst performance, dipping -33% owing to the impact of policy changes in May and June respectively. The disparity between a nominal growth of 982% and a real-term growth of 21% is attributed to a very poor currency performance, which was the second worst performing in the world. The ZWL (Zimbabwe dollar) depreciated by -88,8% against the US$ in 2023, second to (the) Lebanese pound, which shed off -89,9%,” the report noted.
Equity Axis said the ZSE reported a historical best performance in May, after its main index firmed by 161%, driven by a flight to safer territory following jitters over haste policy shifts that came through midday, as authorities battled to stem volatilities.
Confronted by a sea of headwinds, policymakers raced mid-year to float the exchange rate and introduced the foreign currency auction system to help markets access cheaper forex.
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In the aftermath of the changes, the formal exchange rate firmed, battering Zimbabwe dollar indexed assets including stocks.
“This explains the staggering -30% decline in the All-Share Index in US$ terms in June 2023, which is unprecedented,” Equity Exis noted.
“Before this sharp plunge, the bourse had risen 44% year-to-date as of May 2023, which was on course to recoup prior year’s losses of -71% as aforementioned. In July, the market dipped in both US$ and nominal terms. The currency fluctuations reversed the positive trend before later mildly recovering in August,” the report added.