ZSE MARKET WEEKLY COMMENT 30.08.19

The stock market maintained a losing streak as 3 of the 4 ZSE indices tumbled again, this time on wider loss margins. The ZSE All Share index eased by -4.57% to settle at 166.36 while the duo of ZSE Industrials and ZSE Top 10 eased by -4.65% and -6.13% each to settle at 553.59 and 148.96 respectively.

Stocks have been on a decline for 4 straight weeks defying a generally risky environment and heightening uncertainty given recent political developments.

Losses over the 4 week period have largely driven by heavy cap counters and cumulatively stand at -13.13%. the losses which would otherwise be atypical have largely arisen due to movement of funds from the stock market to alternative assets primarily prescribed assets.

Large pension funds, insurance companies and asset managers have been shoring up their prescribed asset holdings to meet regulatory requirements following the upward revision of thresholds.

Recent TBs released to the market via auction has attracted significant bids at suboptimal yields. Analysts at Equity Axis are of the view that the TB market has given room for portfolio reconfiguration in a market which has had less alternatives to the stock market.

The redistribution is however mainly as a result of the above mentioned need to align portfolios with regulation. In months to come, the yield on TBs is likely to trace up and movement from stock market slow down which may imply a rerating of the stock market upwards again.

Respect Gwenzi

Respect is the Lead Analyst and Managing Director at Equity Axis. He has 8 years experience in respective fields of finance and media. Particular areas of expertise include Asset Management, Stockbroking and Financial Media. Respect is on a mission to change the course of Financial Media in Africa through digitalization

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