The Zimbabwe Stock Exchange took a tumble after Emmerson Mnangagwa was installed as president in the place of long-ruling dictator Robert Mugabe — but now there has been a turnaround
After the military intervention in November last year that led to the resignation of long-serving Zimbabwean leader Robert Mugabe, a bull run on the Zimbabwe Stock Exchange (ZSE) came to an abrupt stop. But seven months later the bulls are back, strutting their stuff on the ZSE. The market is up 34.06% in just one quarter.
Last year investors felt the economic outlook had changed after Emmerson Mnangagwa took over the top office. Inflation fears emanating from continued printing of bond notes, a currency that authorities claimed had the same value as the US dollar, and the creation of electronic currencies by the central bank had spooked investors.
Until then, stocks had largely been a hedge against inflation but investors felt they no longer served this purpose.
A great correction began.
The value of stocks came down from a peak of US$16bn to $9.5bn by end-December 2017. Even the best stocks were not spared.
For instance, in the quarter to March, British American Tobacco Zimbabwe, a local unit of BAT Plc, had dropped 44.2%.
Delta Corp, the beverages and beer maker and the biggest company by market value, fell 41.8% in the same period. Delta is owned by AB InBev.
Axia Corp, Delta, Innscor Africa Ltd and CBZ Holdings were the biggest losers, with the counters falling up to 45.5% in the period.
It seemed there would be no respite from the market rout. By the end of the first quarter of 2018 the top 10 index, representing the 10 largest companies by market capitalisation, had fallen 15.27% since December, while the all share index was down 13.8%. Losses were more pronounced in the biggest companies as investors dumped overpriced stocks and sought out value.
