Equities on the Zimbabwe Stock Exchange (ZSE) firmed in the month of April with total market value jumping 8 percent to $63 billion as investors seek a hedge against inflation.
Figures from the Zimbabwe National Statistics Agency (ZimStats), show that annual inflation for the month of March stood at 676 percent, which market watchers project to continue on an upward trajectory on trickle down effects from the increase in retail consumer prices. Additionally, increased electricity tariffs, unplanned costs of mitigating supply chain disruptions during the current global Covid-19 pandemic will also contribute to the rise in inflation.
Government also announced an $18 billion stimulus package to recapitalise industries and cushion them against the effects of Covid-19.
“Going forward, the likely impact is money supply growth triggered by the proposed stimulus package, as there is suspicion Government is likely to print money in order to finance the stimulus package,” said brokerage firm IH Securities in their monthly snapshot.
During the month of April, the ZSE All Share Index was up 7,1 percent to 488,6, while the ZSE Top 10 Index rose 7,13 percent to 397,18 points on gains recorded in the market’s heavyweights Delta, Cassava and Econet that rose 30 percent, 10 percent and 6 percent respectively.
Despite the overall growth recorded, total turnover took 29 percent to $255,18 million, with average daily trades of $12,76 million realised. The market’s top cap counters were the most significant contributors to total value traded with Delta accounting for 30,9 percent, while Innscor and Cassava contributed 10,23 percent and 10,06 percent respectively.
At 104,4 million shares, total volume traded fell by 39, 52 percent.
Headlining gainers for the month was Powerspeed that put on 161,36 of value, while brick making firm- Willdale followed with a 92,81 percent gain. Other significant gains were recorded in Edgars, Turnall and Dawn that put on 92,25 percent, 68 percent and 63,64 percent in that order.
On the downside were Meikles that eased 24,9 percent, while seed producer, SeedCo went down 10,68 percent. Regional cement producer, PPC lost 7,28 percent while Simbisa fell 7,15 percent. Most expensive stock and cigarette maker, BAT wrapped the top five losers with a 6,98 percent decline.
While the tobacco selling season opened on April 29th, and expected to increase foreign currency inflows in the country, the economy still faces headwinds, some already in existence prior Covid-19 crisis.
For stocks, those with strong capital base, ability to generate cash and in food industry are likely to stand the heat.
“In the current economic climate, we lean towards defensive sectors like food retail, food processing, pharmaceuticals and communications and technology,” said IH placing a buy recommendation on Innscor and Simbisa.