The Zimbabwe Stock Exchange (ZSE) mainstream index grew more than double (113,5 percent) in the third quarter to September, reaching a new high of 418,39 points as demand for equities soared, particularly during September.
The ZSE bullrun intensified in September when the total value of shares on the local bourse (market cap) increased by $5,2 billion in a month to $11,86 billion from $6,66 billion in the previous month. This was driven largely by local institutional investors seeking a real growth component and hedge against inflation that is provided by equities.
Analysts say the issuance of treasury bills into the market by government, is giving rise to the creation of phoney money in the economy through Real Time Gross Settlement (RTGS) which in turn drives inflationary expectations and fuels the ongoing stock market bull run.
The situation can be best explained by Old Mutual which is trading at three times higher on the Zimbabwe Stock Exchange compared to its primary listing on London Stock exchange (LSE), indicating that local assets are overvalued as punters seek to maximise value in Zimbabwe's currency chaos.
The mining index also advanced 75,63 percentage to 122,57 points in the quarter. On a year-on-year basis, both the industrial index and the mining index picked up 322,79 percent and 360,62 percent respectively.
Market capitalisation more than doubled in the third quarter to $11,86 billion from $5,7 billion in the previous quarter while year on year it rose 335,22 percent.
Market turnover recorded in the quarter increased fourfold to $127,8 million compared to $31,96 million recorded in the same period last year, with the month of September contributing 70 percent to the total value of shares traded on the market in the quarter. In September, total market turnover stood at $89,5 million, which is the biggest monthly turnover since dollarisation.
In the year to date, market turnover stood at $242,8 million compared to $121,3 million in the same period last year, with the average monthly turnover increasing to $26,9 million from $13,4 million in the same period last year.
All top 10 companies by market capitalisation on the ZSE traded in the positive during the third quarter of the year whilst only three counters out of the 60 listed traded in the red.
The largest company by market capitalisation, Delta gained 116,55 percent in the quarter to close at 275,02 cents.
Econet advanced 139,94 percent to settle at 84,89 cents while Simbisa gained 250 percent to close at 70 cents in the quarter under review.
Padenga and OK Zimbabwe added 232 percent and 215 percent to close at 90 cents and 30 cents respectively.
Innscor, Old Mutual and Seedco gained 150 percent, 137,54 percent and 100,34 percent in the quarter to settle at 180 cents, 919,29 cents and 280,48 cents in that order.
BAT and Natfoods also picked up 68,06 percent and 32,47 percent to trade at 3,025 cents and 503,4 cents respectively.
Among top gainers, were General Beltings and CFI whose share prices gained 445,45 percent and 298,81 percent to close at 0,6 cents and 67 cents respectively.
Axia, African Sun and Afdis also advanced 240 percent, 200 percent and 179 percent in the quarter to close at 33,01 cents, 4,5 cents and 170 cents in that order.
Ariston and Dairibord also gained 170 percent and 165 percent to close at 2,7 cents and 16,5 cents respectively.
Losses were recorded by ART, FML and Fidelity in the quarter, after their share prices eased 12,73 percent, 10,38 percent and 1,79 percent to trade at 4,8 cents, 9,5 cents and 13,75 cents respectively.
On the mining space, all mining counters traded in the positive in the quarter. Bindura and Riozim gained 66,67 percent and 81,82 percent to close at 5 cents and 100 cents while Facon and Hwange advanced 100 percent and 49,6 percent to settle at 2 cents and 3,74 cents respectively.
Foreign investor participation has generally been lower in the third quarter compared to same period last year, commanding 26 percent of the trades in the quarter, down from the 51 percent achieved in the same period last year.
Total foreign purchases amounted to $21,3 million in the quarter compared to $8,4 million in the comparable period last year. Equity disposals for the quarter amounted to $46,1 million relative to $24,3 million achieved last year. Foreigners continued to be net sellers, with the net selling value (net outflow) rising from $24,8 million to $15,8 million.
Notwithstanding the difficulty in remitting sale proceeds, driven by nostro pressures, foreign investors are opting to sell and reserve better positions in the remitting queue.
Increased net outflows are a concern given that attracting foreign capital inflows is vitally important in driving economic growth.
Nonetheless, given the unconvincing returns on money market instruments and lack of profitable alternative investments, local investors will likely continue to view equities as the preferred investment assets in the medium to long term.