7 September 2017

Zimbabwe: ZSE Rallies As Flight From Near-Cash Assets Continues

THE total value of Zimbabwe Stock Exchange hit a new record high on Tuesday as investors holding on to near-cash assets continue to pile into the bourse as a safe haven over currency concerns. At present, Real Time Gross Settlement balances that are in the bank cannot be meaningfully deployed into the productive sector as companies are failing to pay foreign suppliers. On the ZSE, market capitalisation is now at an all time high after having gone past the $7 billion mark this week.

Securities Exchange Commission of Zimbabwe surveillance and risk manager Mr Noel Mahombera said while the rally could be partly attributed to a number of market factors but chief among them the growing RTGS balances.

"The debt assumption bill (which saw Government issuing the TBs to settle debts) and other funded programmes saw a lot of liquidity being injected into the system," said Mr Mahombera.

"This is RTGS money and it has to find a home. People can buy property locally but they can't import anything because the money is locked into the system. So part of the money gets to the market. So it's part of the equation. Mr Mahombera said it was difficult to forecast how the stocks would performance, going forward, but projected the market "will obviously cool off."

At the close of trades yesterday, the ZSE added 4,72 percent to 262,91 and has now risen 81,91 percent in the year to date, the highest gain in the world. The Minings Index was up 2,17 percent to 79,58 percent.

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