BEVERAGE maker, Delta Corporation Limited, has been attracting more than half of the investors participating on the Zimbabwe Stock Exchange (ZSE), leading to its market capitalisation soaring by 37% to US$1,03 billion.
Delta’s capitalisation was US$755,18 million at the end of 2023.
Since the start of the year, equity trades have been overwhelming, dominated by trading in Delta as investors have sought a stable counter to hedge against the depreciating local currency. The gain represents a US$278,71 million rise in Delta’s valuation, making it the most valuable counter on the ZSE.
The local currency has depreciated by over 70% against the greenback since the beginning of the year.
“Since the beginning of the year, approximately US$15 million worth of shares were traded on VFEX (Victoria Falls Stock Exchange) and ZSE equities,” local market researchers ZSE Technician said, in its latest newsletter for the week ending February 4, 2024.
“Delta dominates the market with more than a third and total dominance of the big four is 79. Delta broke out of the historical average of US$0,53 in week five (of the new year). There is a resistance from the 2023 high of US$0,70 and Delta closed the week at US$0,69. For short trades, this was a perfect exit point and for the long-term, be prepared for a major pull back.”
ZSE Technician said if it broke the US$0,70 mark, the next stop would might be US$0,94.
In last week’s performance, the research firm noted that 53% of all volumes on the ZSE was allocated to Delta, a signal that many institutional investors are targeting the counter.
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“Econet attracted 22% and FBC 4%. FBC is not a highly active stock and has (had) about three high volume trades in 2024,” ZSE Technician said.
On the VFEX, fast food firm Simbisa Brands recorded the highest percentage of volumes traded at 49%, Innscor Africa (40%) and Axia Corporation (6%).
Padenga Holdings and First Capital Bank had the least percentages of volume concentration.
“Generally, the whole ZSE is overbought and since three counters determine the direction of the index, Econet can reduce a bearish force that can be caused by current key levels,” the research firm noted.
The three counters, apart from Delta, include Econet Wireless Zimbabwe and FBC Holdings.
The research firm said the major economic indicator affecting the ZSE now was the exchange rate.
“The ZSE index is running away from a flat parallel market exchange rate resulting in 89% USD (United States dollar) value gains in 2024. A flat PMR (parallel market rate) indicates that the economy is expecting a jump in exchange rate as the RBZ (Reserve Bank of Zimbabwe) is trying to close the premium of the black market,” ZSE Technician said.
It added that changes in the official rate were now higher than those in the parallel market.
This can be seen in the fact that while the local currency depreciated by over 70%, year-to-date, on the official forex market, on the parallel alternative, the depreciation was 33,6%.
“We also need to monitor parallel market premium since it directly affects the ZSE index.”
