Zimbabwe: Sober Bears As Bourse Opens

A Zimbabwe Stock Exchange tweet.
4 August 2020

The growing success of the foreign currency auctions to stabilise exchange rates and the consequent dramatic lowering of inflation expectations were reflected on the Zimbabwe Stock Exchange (ZSE) yesterday when it restarted trading following a five-week suspension.

When trading was suspended, the ZSE had seen a prolonged bull run as investors saw equities as a hedge against rising inflation.

But yesterday sober bears moved in although falls in prices were generally small, averaging close to 5 percent with a similar drop in total market value from $228 billion recorded on 26 June to $218 billion.

These modest falls are likely to be the result of actual lower inflation in the past few weeks and expectations that inflation levels will remain well below the June jumps.

Government had suspended trading activity after June 26 to investigate potential manipulations of prices. After finding that trading in purely local shares was not a problem, the ZSE was allowed to re-open.

However trading is still suspended in the three shares that are quoted on other exchanges, financial services giant Old Mutual, regional cement maker PPC, and seed producer Seed Co International.

There have been allegations that the price comparisons of the three across exchanges have led to price manipulations by buyers and that the price comparisons have been severely misinterpreted as a virtual exchange rate.

By close of Monday trades, all indicators were in the negative as stocks across the board fell in price, mostly modestly.

The primary indicator, the ZSE All Share Index shed four percent to settle at 1 708 points, while the ZSE Top 10 eased five percent to 1 163 points as the market's heavy cap counters were brought into line with currency economic expectations.

The ZSE Top 15 reduced by 75 points to close at 1 337 points. At 3 213 points, the Medium Cap was 89 points less. The Small Cap went down four percent to close at 5 313 points.

Weighing down the market were Powerspeed that lost 20 percent to $1,16. Padenga lost 19 percent to $11,05 and MedTech lost the same percentage to 9,5 cents. TSL eased 17 percent to $3,40 while Mashonaland Holdings wrapped the top five fallers with a 16 percent decline to 60 cents

Only Bindura and ZB Financial Holdings traded up to close at $3,93 and $11,35 in that order.

At $2,9 million, foreign sales outpaced the $57 909 foreign buys. Total turnover amounted to $10,246 million.

At the top of the trading drivers were diversified industrial conglomerate Innscor at $2,369 million, Delta at $1,668 million and Bindura at $1,367 million. Padenga, at $770 185, and Seed Co at $749 050 made up the rest of the trading top five.

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