Local firms on Africa ranking to spur ZSE, Bgoni




Zimbabwe Stock Exchange Chief Executive Officer, Mr Justin Bgoni

The Zimbabwe Stock Exchange (ZSE) could become more attractive to global investors if more listed companies make it to the list of top companies in Africa, according to ZSE chief executive officer (CEO), Mr Justin Bgoni.

Pan African business magazine – African Business’ survey, features predominantly companies from the continent’s biggest economy – South Africa.

Last year, only beverages giant and ZSE largest company by market value, Delta Corporation and telecomms bluechip, Econet Wireless, made it among Africa’s elite club.

But, in a demonstration of the resilience of Zimbabwe’s economy despite the challenges it faces, the list this year features five new entrants from Zimbabwe namely Cassava Smarttech, Innscore, Hippo Valley, CBZ and Simbisa.

This brings to seven, Zimbabwean companies on the list.

“What happens is that institutional investors, especially foreign ones, like to invest in large companies. So the more companies you have in that top 250, the more attractive your market.

“So this is a good thing, we are hoping the companies move up the ladder and get into the list of the top 250 companies in Africa.

“The companies on the stock exchange have been very resilient, most of them have managed to maintain profits, employ people and pay their taxes against tough times,” he said.

African Business magazine said for the year to December 2020, Nigeria was hailed by Bloomberg as “the world’s best performing stock exchange, with its All Share Index (ASI) up 50 percent for NGN investors and over 40 percent for US dollar investors. The main index retreated slightly in the first quarter of 2021.

However, research house African Markets says the “best-performing” crown rightfully belongs to Zimbabwe. In 2020 the ZSE ASI index had a lift-off year, up 1 045.8 percent for investors in Zimbabwean dollars and up 135 percent in US dollars.

It rose another 70 percent for Zimbabwe dollar trades and 65 percent for US dollar investors over three months to March 2021.

In both exchanges, some gains were due to undervalued companies. Investment in Nigerian shares has been driven by local institutions hunting for yield as rates on debt fell below 1 percent.

The entry by Zimbabwean firms into the Africa top 250 companies is in sync with a resilient Zimbabwean economy, which has defied disruptions of Covid-19 to show strong signs of growth.

Finance and Economic Development Minister Mthuli Ncube, has projected the economy will expand by 7,8 percent from the initial forecast of 7,4 percent, which he predicted in November last year.

Zimbabwe’s growth will this year be pushed by strong performance of agriculture, which is seen growing by weighty 34 percent, expected strong global mineral prices, massive public infrastructure programmes and improved electricity production.

Signs of an economy on the ascend have included the rapid fall in annual inflation, from a post dollarisation peak of 837,5 percent reached in July last year to 50,2 percent last month, stability of the auction exchange rate and now almost regular budget surpluses.

African Business said Zimbabwe has been the regional laggard economically but paradoxically Africa’s top-performing stock exchange.

The challenges have not stopped rocketing share prices for local investors, who have seen significant gains in 12 months (the best performer was up 12 093 percent in 2020).

The massive gains in market capitalisation at official foreign exchange rates saw many new Zimbabwean companies join the Top companies ranking, including finance firms CBZ position (#147) and Cassava SmarTech (#186), and consumer firm Hippo Valley Estates (#218).

African Business said the huge climb in share prices on the ZSE has had its impact on the Top Companies rankings, where market capitalisation is cited at official forex rates. According to African Markets, commenting on calendar year performance:

“Top performers include the financial services group CBZ (+12,093.4 percent), which overtook the beverage company Delta Corporation as the most valued company on the ZSE, Masimba Holdings (+6,533.2 percent), Cafca (+4,950 percent), Hippo Valley Estates (+4,524.2 percent), and ART Corporation (+3,291.6 percent).”

CBZ bursts in at #147 on the Top 250 Companies, its market capitalisation up from $42m in 2020 to $570m in 2021. By March, Delta had regained its crown as biggest Zimbabwean company, just ahead of Econet Wireless, at #130 and #131 on the list, respectively. – Herald