ZSE shows mixed performance in July

Tapiwanashe Mangwiro

LOCAL stock exchanges were in July marked by notable movements and opportunities, reflecting both resilience and strategic adaptation among listed companies.

The Zimbabwe Stock Exchange (ZSE) demonstrated robust performance last month, with market capitalisation increasing by 6,98 percent to close at ZiG64,92 billion.

This growth was underpinned by a 4,30 percent rise in the All-Share Index, while the Top 10 Index lagged slightly, increasing by 2,68 percent.

In United States dollar terms, the market also saw a corresponding 6,98 percent rise to US$1,85 billion, supported by relatively stable exchange rates throughout the month.

July saw the ZSE record its highest ever monthly ZiG turnover, at ZiG770 million, up by 45 percent from June’s turnover of ZiG532 million.

Posting on its X handle, the bourse said the high turnover was “a clear indicator of powerful market momentum and trust”.

ZSE chief executive officer Mr Justin Bgoni took to X to celebrate the achievement.

“We are seeing increased activity across our platforms, a clear testament that our market is getting attractive,” he said.

“I say this all the time, Zimbabweans underestimate the need for liquidity. Illiquid investments have led to expensive borrowings and unfortunately sometimes to the loss of that investment.”

Seed Co emerged as a standout performer, witnessing a remarkable 58 percent increase in its share price, followed closely by BAT with a substantial 29 percent gain.

Conversely, ZSE Holdings Limited experienced a significant adjustment, with a 40 percent decline in its share price, reflecting ongoing market discovery processes.

OK Zimbabwe faced headwinds, losing 30 percent of its value within the same period in the wake of its capital raising efforts.

Trading activity on the ZSE showed mixed results, with the average daily value traded increasing by 32,24 percent to ZiG33,5 million in nominal terms.

Daily volumes, while marginally down by 0,35 percent to 18,66 million shares, maintained robust liquidity with an average daily trade value of $0,975 million.

EcoCash dominated trading volumes with 238,28 million shares, while Econet contributed significantly to the value traded, representing 51 percent, at ZiG396,66 million.

According to IH Securities, the performance of the ZSE continues to hinge on money supply dynamics and potential shifts in monetary policies.

They advocate for agile companies that are capable of navigating these challenges, emphasising the value of consistent dividend payers amidst a constrained capital gains environment.

The securities firm said: “In our view, performance of the ZSE still depends heavily on money supply dynamics. Given the delicate monetary space with the likelihood of policy shifts, we are in favour of agile companies that
can navigate the current environment, and in the
absence of capital gains, those that are consistent dividend payers.”

In contrast, the Victoria Falls Stock Exchange (VFEX) demonstrated robust growth, with its All-Share Index rising sharply by 15,15 percent to 123,46 in July.

This performance was underscored by positive movements across key counters, highlighting renewed investor interest in the exchange.

Padenga led the pack on the VFEX, surging by 33 percent during the month, followed closely by Simbisa and Innscor, which rose by 28 percent and 22 percent, respectively.

However, Edgars experienced a setback with a 14 percent decline, while Axia edged down by 2 percent.

Trading activity on the VFEX showed a different trend, with total value traded declining by 40,94 percent to US$4,26 million.

Despite this, Simbisa maintained leadership in both value traded and volumes, recording US$2,97 million and 9,07 million shares, respectively.

Looking ahead, IH Securities anticipates potential upward momentum on the VFEX as new benchmarks are set, although caution is advised regarding current price levels exceeding year-to-date (YTD) averages for many counters.

Fundamentally, they suggest a prudent approach amidst the perceived undervaluation of the bourse.

“Forward-looking, we are potentially in a period on the VFEX where new ceilings are being set, with current prices exceeding YTD averages for the bulk of counters.

“Whilst on a fundamental basis, the bourse remains undervalued, we are of the view of adopting a cautious approach to current price levels,” the securities firm said.

Both the ZSE and VFEX are navigating unique challenges and opportunities, reflecting resilience and strategic agility among listed companies.

As Zimbabwe’s economic landscape evolves, these insights from IH Securities provide a nuanced view for investors looking to capitalise on emerging trends in the local stock markets.