Online Reporter
Nelson Gahadza, Zimpapers Business Hub
ZIMBABWE’S capital markets rebounded strongly in May, with the Zimbabwe Stock Exchange (ZSE) and the Victoria Falls Stock Exchange (VFEX) posting gains as improving investor sentiment, easing inflationary pressures and growing confidence in macroeconomic stability boosted demand for equities.
Following a subdued April, investors returned to the market in search of quality assets, driving benchmark indices and market capitalisation higher despite persistent liquidity constraints, uneven foreign participation and mixed performances across investment products.
The recovery signals a gradual restoration of confidence in Zimbabwe’s bourses, although investors are increasingly becoming selective, favouring companies with strong fundamentals, resilient earnings and long-term growth prospects.
According to market statistics from the ZSE, collectively, the two exchanges added substantial value during the month, with the ZSE gaining more than ZiG6 billion in market capitalisation, while the US dollar-denominated VFEX added approximately US$250 million.
However, analysts say the rally was not broad-based and was largely driven by a handful of counters that continued to dominate investor interest.
On the ZSE, trading activity strengthened considerably during the month after total turnover rose by 3,9 percent to ZiG531,1 million in May from ZiG510,9 million in April, while trading volumes surged by nearly 52 percent to 81,4 million shares from 53,6 million shares.
The number of transactions also increased by 13,6 percent to 2 218 trades from 1 953 in April.
The benchmark All-Share Index advanced by 6,6 percent to 389,26 points from 365,17 points, while the Top 10 Index gained 5,8 percent to close at 384,31 points from 363,18 points.
Overall market capitalisation rose by 7,3 percent to ZiG89,56 billion from ZiG83,46 billion, adding more than ZiG6 billion in value in a single month.
The rally was largely anchored by significant gains in Tanganda Tea Company, which surged by 151,6 percent, while TN CyberTech Investments Holdings rose by 44,2 percent.
Tanganda’s impressive performance came amid a major corporate restructuring following consumer goods giant Innscor Africa’s acquisition of a 27 percent stake through its investment vehicle Rutanhi Beverages.
The transaction, supported by a US$8 million rights issue, has significantly reshaped the company’s shareholder structure and strategic direction.
The company has also undergone sweeping governance changes, including the departure of long-serving chairman Herbert Nkala after nearly three decades at the helm.
TN CyberTech Investments also attracted investor attention after outlining plans to intensify its digital-first banking strategy during the 2026 financial year through strategic partnerships, artificial intelligence and expanded digital networks aimed at enhancing financial inclusion.
Other notable gainers included Ariston Holdings, which rose by 30,9 percent, ZSE Holdings, up by 16,9 percent and CBZ Holdings, which advanced by15,4 percent.
Ariston recently approved a major board overhaul as it seeks to address liquidity challenges and concerns over its going concern status.
Meanwhile, ZSE Holdings benefitted from investor optimism and the company recently announced a partnership with Red Sphere Microfinance, a subsidiary of CBZ Holdings, to launch a technology-driven Trade Receivables Discounting Platform under the Zimbabwe Entrepreneurship Exchange (ZEEX).
The initiative is expected to unlock much-needed working capital for small and medium enterprises by enabling suppliers to convert unpaid invoices into immediate cash through a regulated digital marketplace.
CBZ Holdings emerged as a preferred counter as investors increased exposure to banking stocks amid expectations of improving economic activity.
Brokerage firm FBC Securities said one of the key drivers behind improving market sentiment was the continued stability of inflation.
“Monthly inflation peaked at 1,1 percent in April, but eased to 0,5 percent in May, while annual inflation remained contained at 4,4 percent,” the brokerage firm said in its monthly equities review.
“This low inflation environment has preserved the real value of ZiG-denominated assets and encouraged domestic investors to remain allocated to equities rather than fleeing to hard assets.”
FBC warned that exchange rate developments remain a key risk, with the interbank rate depreciating by about 3 percent during May, from ZiG25,34 per US dollar to ZiG26,90 per US dollar.
The brokerage firm said the outlook for the ZSE over the next three to six months remains positive, supported by relaxed listing requirements under Practice Note 18, although sustaining the rally will depend heavily on the central bank’s ability to preserve foreign currency reserves and maintain stability in ZiG.
On the ZSE, foreign investor participation also improved during the month.
Foreign purchases rose by 4,4 percent to ZiG97,7 million from ZiG93,5 million, while foreign sales decline by 5,7 percent to ZiG143,9 million from ZiG152,6 million.
Although foreign investors remained net sellers, the narrowing gap between purchases and sales suggests offshore investors are becoming less aggressive in reducing their exposure to Zimbabwean equities.
Analysts believe sustained macroeconomic stability could eventually encourage a return of foreign capital.
On the VFEX, valuations strengthened significantly despite weaker trading activity, suggesting investors are increasingly adopting longer-term investment strategies.
Equity trading volumes fell by nearly 54 percent to 42,04 million shares from 91,31 million shares in April, while turnover declined sharply by more than 81 percent to US$16,76 million from US$89,33 million.
Despite this slowdown, the VFEX All-Share Index rose by 7,1 percent to 245,12 points from 228,92 points, while market capitalisation increased by 7,13 percent to US$3,74 billion from US$3,49 billion.
The number of trades also edged higher to 2 904 from 2 849, indicating resilient investor participation.
Performance on the VFEX was largely driven by Zimplow Holdings, which surged by 126,8 percent to 11,50 US cents, Edgars Stores, up by 126 percent to 4,152 US cents, First Capital Bank, which gained 38 percent to 14,84 US cents, and Padenga Holdings, which advanced by 19,2 percent to 107,54 US cents.
Zimplow attracted investor interest due to its diversified operations across agriculture, construction and infrastructure sectors, while Edgars delivered a resilient performance despite operating in a challenging economic environment characterised by tight liquidity and elevated real interest rates. Padenga benefitted from strong operational performance, with first-quarter gold production increasing by 13 percent to 696,7 kilogrammes from 618,9 kilogrammes in the comparable period last year.
The company’s earnings were further supported by elevated international gold prices, which averaged US$4 875 per ounce during the quarter compared to US$2 887 previously.
FBC Securities said the VFEX continues to attract investors seeking protection from currency depreciation because it trades exclusively in US dollars.
“This has been a powerful magnet for foreign portfolio flows and local investors seeking hard currency exposure,” the brokerage firm said.
“The 7 percent index gain in May occurred despite a decline in international gold prices, suggesting that VFEX-listed companies are increasingly being rerated based on operational improvements rather than commodity prices alone.”
It said the tobacco selling season is also expected to provide additional US dollar liquidity that could support further investment into VFEX-listed equities.
Looking ahead, FBC expects the VFEX to benefit from two major structural developments.
“The first is the anticipated migration of high-quality companies from the ZSE, including TSL Limited, which is seeking shareholder approval for a VFEX listing,” said FBC.
“The second is the continued strength of global gold prices, which remain historically elevated despite retreating from their January peaks.”
FBC cautioned that liquidity concentration remains a significant risk.
“The sharp decline in turnover during May highlights the exchange’s vulnerability to periods of low trading activity, underscoring the need for additional listings and a stronger market-making ecosystem,” the brokerage firm said.
According to VFEX statistics, foreign participation on the US dollar-denominated bourse also weakened significantly during the month.
Foreign purchases declined by 78,5 percent to US$235 676 from US$1,09 million in April, while foreign sales plunged by nearly 99 percent to US$57 354 from US$4,25 million.
Market observers believe this largely reflects investor consolidation following unusually high activity in April rather than deteriorating confidence.
Investor appetite for diversified investment products remained mixed.
On the ZSE, real estate investment trusts (REITs) lost momentum, with turnover falling by 44,3 percent to ZiG22,3 million from ZiG40 million in April, as investors redirected capital towards conventional equities offering better returns.
Exchange-traded funds (ETFs), however, staged a strong comeback. Turnover surged more than fourteen-fold to ZiG253 369 from just ZiG16 229 in April, while trading volumes rose to 2,37 million units from 154 108 units.
On the VFEX, REITs delivered impressive growth, with trading volumes increasing more than four-fold to 2,47 million units, while turnover rose by 322 percent to US$355 035.
The exchange also continued expanding its product offering through ETFs, which recorded trading volumes of 386 865 units and market capitalisation approaching US$3 million.
Economist Mr Walter Mapfumo said May’s performance signals that Zimbabwe’s capital markets are entering a more mature phase, characterised by selective investment decisions rather than broad-based speculative rallies.
“The market is becoming increasingly sophisticated,” he said.
“Investors are rewarding quality companies and avoiding indiscriminate risk-taking. That is a healthy development because sustainable growth in capital markets is driven by fundamentals rather than speculation.
“However, liquidity remains a major challenge. Going forward, attracting foreign participation and maintaining policy consistency will be critical to sustaining this momentum.”
