ZSE’s upward trend continues

A broker makes a bid at the morning trading session of the Zimbabwe Stock Exchange in the capital Harare April 3, 2008. There was still no official word on the result of Zimbabwe's presidential election on Thursday as Robert Mugabe fought to survive the biggest crisis of his 28-year rule. REUTERS/Howard Burditt (ZIMBABWE)

The Zimbabwe Stock Exchange (ZSE) continued trekking upwards during the week ended June 21 2019 spurred by the announcement that Zimbabwe’s year- on-year inflation rate for the month of May 2019 had risen.

According to official Zimstats statistics, inflation soared to 97.85% (from the April’s 75.86%), confirming the country is heading towards hyperinflation.

Total market capitalisation for the ZSE was up 7.70% to $29,589 million from last week’s $27,473 million.

All equity benchmarks closed the week at record highs, on sustained demand across the board: the All Share Index and the Top 10 Index were up 7.71% and 7.95% to close the week at 222.73 points and 217.73 points respectively.

The Industrial Index breached the 700-point mark, rising 7.78% this week to close at 743.00 points. Mining counters gained 13.73% to close the week at 282.64 points after a strengthening in the price of Bindura Nickel Corporation and RioZim Limited by 11.81% and 18.18% respectively.

Year-to-date, the ZSE is up 52.30% as measured by the All Share Index, ahead of year-to-date inflation rate of 39.57%.

Double-digit gains were recorded in 15 counters this week. Seedco International led the risers with a 34.82% gain after declaring a United States dollar dividend of 0.33USc.

The final date to trade in order to qualify for this dividend is June 25 2019. Other significant gains were seen in Dairibord, up 33.33%, and FBC Holdings, up 25.37%.

The only loss for the week was seen in First Capital Bank, which shed 13.04% to close the week at $0.08.
The local bourse was very active during the week, with a series of block trades boosting volumes and turnover. Volumes activity was mainly anchored by block trades in Star Africa, CBZ Holdings and Mashonaland Holdings, which contributed 25.89%, 24.94% and 12.94% to total volumes respectively.

A total of 93,752,500 shares changed hands during this week’s trading session, a 194.27% increase from 31,859,330 shares traded last week.

Total turnover at $66,516,658 was 83.67% higher than last week. Turnover was largely driven by activity in Old Mutual, which contributed 24.37%, followed by CBZ Holdings (18.90%) and Delta Corporation (10.07%).

Among the heavyweights, the top three counters by market capitalisation, Econet Wireless Zimbabwe, Cassava and Delta Corporation, recorded gains of 7.71%, 7.01% and 5.52% respectively. Innscor Africa added 16.49% last week to close at a price of $2.7527 on trades in 1,168,900 shares worth $3,183,802. Old Mutual advanced 18.94% to $17.1475 with turnover of $16,208,670, while another fungible counter, PPC, edged up 3.52% to close the week at $2.4305 on trades worth $5,245,958. The Old Mutual Implied Rate (OMIR) closed the week at 10.7861, an uptick from 9.4465 recorded last week.

We anticipate that the growing hyperinflation fears will continue to drive investors towards non monetary assets. We have also started seeing some speculative behaviour on the local bourse as speculators try to profit from the prevailing market movements. As sellers largely continue to hold on to their stocks, we anticipate that the market will continue to trade higher this coming week, in the absence of any radical announcements by policymakers.

Akribos Research