Weakness persists on ZSE in August

HARARE – Weakness persisted on the Zimbabwe Stock Exchange (ZSE) in August, with a cumulative $300 billion wiped off the market amid a retreat in the market’s heavyweights.

This resulted in the benchmark indices closing the month pointing southwards. The ZSE Top 10 Index shed 20 percent to 8 209 points from 10 265 points as uncertainties frayed investor nerves.

At 29 026 points, the Mid Cap Index was 12 percent below July closing level.

The ZSE All Share Index shed 17 percent to 13 705 points from 16 594 points reflective of the losses recorded across the board.

In real US dollar terms, the ZSE has lost 72 percent, putting it at the base of most markets in the region on a year-to-date basis, according to AfricanMarkets.com. Trades on other regional exchanges in Ghana, Egypt and Morocco have also been sluggish since the beginning of the year, recording losses of 45 percent, 29 percent and 20 percent respectively.

Equities in Kenya, Uganda and South Africa have also been on a downward trend, easing 21 percent, 15 percent and 10 percent in that order in real US dollar terms on a year-to-date basis.

But the depressed performance is not peculiar to the ZSE and regional markets alone as global equities last week tumbled to a six-week low on slide in Asian shares following a lockdown in China’s Chengdu,  a city of 21 million, to contain the spread of the Covid-19 pandemic. A restrictive monetary policy in the US has also seen market jitters while a group of 10 currencies weakened with the Yen falling to a 24-year low.

On the local scene, the local currency has continued to weaken against the US dollar, fuelling inflationary pressures, with the interbank rate moving by 22 percent to $542 for the greenback compared to $443 at the end of July.

During the month, telecoms giant, Econet, dropped 31 percent to $108,77 while Delta let go of 16 percent to $221,89. Axia was also on the downside falling 26 percent to $58,78 from $79,93 in July.

At $57,81, financial services group  FBC Holdings was 12 percent lower than the $65,80 in the prior comparable month.

Diversified hospitality group Meikles lost 7 percent to $100 as the group reported an uplift in annual earnings driven by solid performance by its supermarket segment.

Peers in the retail sector, OK Zimbabwe, however gained 14 percent to $34,22, offsetting further losses on the market.

Construction materials supplier Turnall Holdings remained flat at $4,75 as the group is looking at recapitalising its manufacturing plants to improve production capacity and efficiency.

One of the group’s focus areas is the resuscitation of its fibre-cement plant in Harare in order to increase production capacity and meet growing demand for construction material in the country.

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