ZSE main board close in gains as VFEX goes live

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Overall Comment

•             All Share Index up 2.28%, from -2.9% loss in the prior

•             VFEX witnesses first trade of 1000 SeedCo Int. shares 

•             ZWL spreads loss wider against USD

In a week characterized by flip-flopping performance, the ZSE closed 2.28% firmer settling at 1510.58points. The weekly gains partially offset prior week losses. The bourse has not been on a consistent path in either direction for over the latest 5 weeks.  The volatility in stocks comes on the backdrop of a stabilising exchange rate, which has traded within narrow margins and tightening spread over the last 10 weeks. During the week the sole listed counter on the VFEX, SeedCo International traded, in a first marking materialisation of activity on the bourse. 1000 shares were traded in the counter.

In the week under review the local unit pared -0.394% against the greenback, its widest depreciation in 3 weeks. The Zimdollar has lost ground to the USD over the latest 3 weeks, curtailing a 7-week trend of mild gains. The Zimdollar however overweight given the escalated demand levels. Demand for stocks typically varies inversely to the exchange rate such that when the exchange rate worsens, stocks move into the positive. We expect the market to largely continue tracking exchange rate dynamics ahead of company specific fundamentals. For the remainder of the year we see stocks performing steadily but with more downside pressure, given the stabilising exchange rate. We are however of the view that exchange rate dynamics may shift early into 2021 thus driving stocks up.

Stocks Performance

Up from 44 in the prior week, a total of 47 counters exchanged hands in the week under review with 19 of these emerging risers. African Sun countered prior week losses on surging 13.5% to close the week at 185c while AfDis followed suit, notching 11.8% to settle at 1900.01c. Innscor came out as the 3rd best performer gaining 11.7% to close at 2100.86c trailed by Truworths which extended prior week gains by a further 10.01% to close at 16.97c. The duo of CBZ and Padenga recovered by +9.8% and +7.6% respectively from prior week losses to settle at 4386.10c and 1400c each. Axia added 7% to settle at 399.95c while the duo of OK Zim and Star Africa added 5.3% apiece to close at 474.19c and 20c in that order. SeedCo capped the Top 10 risers set on surging 3% to settle at 1700c.

On the downside, a pack of 17 counters partially offset the gains. These were led by Mashhold which eased -15.9% to close at 50.50c. The duo of miner, RioZim and Dairibord reversed prior week gains on slumping -12.8% and -11.1% each to settle at 850c and 800c apiece. NMBZ dwindled -10.1% to close at 269.83c while peer miner BNC, shed -9.7%, countering prior week gains, to close at 346.13c. FMP softened -4.5% to close at 219.75c followed by Willdale which closed at 24c/share upon easing -4%. Cassava Smartech countered prior week gains on plunging -3.5% to settle at 385.99c while TSL eased -0.9% to settle at 530.41c. Nampak extended losing streak to a 3rd straight week on slumping -0.8% to close the week at 74.18c/share.

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