Chronicle Editor
Harare Bureau
STOCKS on the local bourse amassed 12 percent gains week-on-week amid a global markets crash on the back of coronavirus (Covid-19) pandemic, as it reversed losses recorded in the past three weeks.
Top global markets have been on a free-fall with billions of dollars lost as the Covid-19, first detected in Wuhan, China in December last year, continues to spread across the world, with the region now recording confirmed cases of the virus. The crypto-currency markets have not been spared neither. Last week, total market value increased by $7 billion or 12 percent to settle at $67 billion.
The ZSE All share Index put on 12.35 percent and closed at 522.2 points bringing its year to date return to 126 percent. Gains in the market’s heavy capitalised stocks and mid-tiers led the rally, which saw the ZSE Top Ten Index rising by 14.17 percent to close pegged at 445.76 points.
Market watchers contend the rally was in line with the exchange rate volatility, which has seen the rate reach as much as $42 for the greenback on the illegal paral-
lel market, which has increased liquidity on the market. The rally is, however, expected to halt following announcements by Treasury to suspend fungibility of Old Mutual, PPC and Seed CO International that are also listed on other exchanges.
PPC is also listed on the JSE, while Seed Co International is present on the Botswana Stock Exchange while Old Mutual is also on the JSE as well as the London StockExchange.
“The subsequent gains were therefore in line with our predictions. While further rally is expected, we see the move to suspend fungibility in dual listed counters as having a direct impact on ZSE performance. OM is a weighty counter and the impact of a selloff will likely drag the market.
“Beyond these temporary shocks we see the market continuing to re-price in line with inflation and exchange rate developments. The adverse movement in exchange rate cheapens ZSE stocks given that underlying business will be re-pricing their products and thus realising higher revenues in ZWL terms. This has consequent effect on valuation matrices,” said analysts- Axity Axis.
This also comes as annual rate of inflation for the month of February is now at 540 percent, which means prices of goods and services rose by 540 percent between February 2019 and February 2020. Month-on-month inflation on the other hand came in at 13,52 percent which is up 2.2 percent in January, although Government is targeting to tame inflation and achieve a single digit figure by year end to below 5 percent.
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