HARARE – The Zimbabwe Stock Exchange (ZSE) faced a challenging November, with total market capitalisation dropping by 32%, businessdigest reports.
The decline was attributed to a combination of undervalued stocks and stagnant price adjustments, according to leading securities firms.
The All-Share Index, which tracks the performance of all companies listed on the ZSE, fell by 8.31%. Losses in the Top 10 and Top 15 indices were the primary drivers of this slump. In contrast, the Medium Cap Index posted a 2.26% gain, while the Small Cap Index remained steady at 100.11.
Turnover Declines
Monthly turnover stood at ZiG287 million, a significant decline from October’s turnover of ZiG503 million. Delta and Econet were the top contributors to turnover.
“This represents a notable drop from October, primarily driven by Delta and Econet,” Fincent Securities stated in its November report. “We expect market capitalisation on the ZSE to recover as liquidity conditions improve. Many significant counters remain undervalued and are yet to adjust their pricing to reflect fundamental values. Delta and Econet will continue playing pivotal roles in driving liquidity.”
Top Performers and Losers
During the month under review, CFI Holdings emerged as the top gainer, with a 48.65% increase, despite trading shares worth only ZiG21,386. Other notable gainers included Proplastics, Cafca, Willdale, and First Mutual Properties. On the losing side, CBZ recorded the steepest decline at -31.84%, followed by OK Zimbabwe, Econet, Meikles, and Nampak.
VFEX Performance
The Victoria Falls Stock Exchange (VFEX) also saw a dip, with market capitalisation declining by 0.32% and turnover falling by 6.7% to US$3.5 million.
Policy Measures and Economic Outlook
To combat inflationary pressures, the central bank raised the local benchmark rate from 20% to 35% and tightened liquidity in both ZiG and US dollars by increasing reserve requirement ratios. Additionally, the Finance Ministry focused on curbing government expenditure and imposing higher taxes on discretionary consumer spending.
Morgan & Co noted that while these measures will constrain ZiG liquidity, temporary surges are expected due to Treasury disbursements throughout the year. “Liquidity on the VFEX will likely increase slightly due to strong demand for US dollars in daily business operations,” the firm observed.
Improved dividend payouts, driven by heightened economic activity, are anticipated to become a key source of liquidity for the VFEX in the coming months.
