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Golden Sibanda Senior Business Reporter
THE Zimbabwe Stock Exchange returned a staggering 40 percent to investors in the first six months of the year despite the shortage of affordable long-term funding and the liquidity challenges confronting the domestic economy. The ZSE’s outstanding reward to investors by far dwarfs what investors realised in other regional exchanges, with the second best performing bourse returning only 26 percent.
Equities analysts IH Securities said despite a 2,15 percent decline in June, total market cap went up 36,64 percent in the first half to US$5,99 billion (including foreign register) against a 10 percent decline to US$3,61 billion in the comparative last year.
“The industrial index returned 40 percent in 1H13 versus other key markets; South Africa minus 4,46 percent, Nigeria 26,10 percent, Kenya 25,40 percent, Mauritius 8,10 percent, Botswana 11,17 percent and Zambia 20,32 percent,” IH Securities said.
IH Securities anticipates a year end target market capitalisation of US$6,37 billion, implying upside potential growth of 6,4 percent in the six months from June 2013.
The mining index also recorded positive growth registering 11 percent return for investors for the period under review despite recent volatility in global commodity prices.
Market turnover for the first half came in at US$224 million, a 13 percent decline from the US$259 million recorded last year. Foreign deal turnover to total market turnover came in at 45 percent compared to 39 percent in last year’s comparative period.
The equity analysts believe that these figures remain grossly understated in view of the potential Zimbabwe has, despite the effects of a 10-year recession.
IH Securities said updates released by key counters in the last few months speak clearly to the significant economic deceleration taking place (and) believe this will remain a key theme in financials in the June earnings season starting in a few weeks’ time.
Companies are expected to continue to rationalise costs to boost efficiencies. Slower earnings growth will most likely be overshadowed by the election and the results.
“However, we believe the election will bring some finality and end the current political uncertainty in the environment. We are optimistic the election will make room for policy shifts and post-election sentiment will provide a positive catalyst for 2H13.”
The economy has once again underperformed expectations, with Government revising the growth target for 2013 from 5 percent to 3,4 percent due to underperformance in agriculture and mining, spurred underpinned the expansion of 2009 to 2011.
Even bank deposits grew by a marginal 0,2 percent to US $4,42 billion in the five months to May 31 2013. Loans increased 3,5 percent to US$3,59 billion while loan to deposit ratio went up from 78,7 percent to 81 percent in the five-month period.
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