Risk aversion further triggers stocks rebound in February

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  • Turnover increased by 18% in nominal terms and 14% in real terms
  • ZSE All Share Index 7% below the prior month
  • Market capitalisation went up for the second successive month

Harare – Trading activity on the Zimbabwe stock Exchange made headway in February emerging as the biggest month in stocks since de-dollarisation of the economy in February 2019.

Turnover for the month under review stood at ZWL340 million indicating an 18% growth from the prior month in which turnover stood at ZWL287.4 million and a 2019 average of ZWL174 million.

In real terms, the value of trades for the exchange rate jumped from US$17.6 million to US$20.1 million.

According to Equity Axis, “the surge in activity was a carryover from the good showing in January which was mainly induced by risk aversion and the opportunities presented by undemanding stocks valuations.

The strong purchase of shares is seen as a correction in a market that had gone for almost a year with undemanding valuations. Stocks were considered cheap based on matrices as the shift from USD to ZWL was not followed up necessary repricing’s.

It is Equity Axis’ view that a depreciating local currency demanded a reciprocating surge in equities as underlying value remained firm. The market however had been slow to respond and consequently the entire bourse was lagging the perceived intrinsic value.

The stock market’s capitalisation levels went up for the second successive month in USD terms benchmarking against the interbank.

In ZWL terms, the ZSE market capitalisation went up by 17.5 billion in February, a gain of 40% on the prior month’s close.

The rise in market capitalisation represents the growth in individual share prices across the market as all the 53 counters on the local bourse recorded month on month growth with heavy caps leading the rally.

The ZSE All Share Index added42% in February therefore settling at 473.13 while the Top 10 index rose by 28% to close at 399.96.

The monthly gains were curtailed after the stock market hit the top, with investors opting to take profits.

“We see profit taking reversing into the new month as investors buy on dips and the weakening exchange cheapen some stocks.

“Another big factor in stimulating stocks in the month was improved liquidity in the market, a factor which is likely to continue to drive stocks.  says Equity Axis analysts.

Equity Axis News

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