ZSE posts worst performance since year beginning

  • Stocks went up, but gains for the month seen at lowest level in 1 year
  • Despite declining demand the ZSE maintains regional top performance at 70.27% in YTD gain
  • Demand slowdown a result of reduced activity as alternative asset classes begin receive investor attention, post hyperinflation

Harare-The Zimbabwe Stock Exchange had its worst performance in a year, as gains for the month of March fizzled compared to prior months.  Data shows that the overall market gained only 8.96 percent to close at 4888.7.  In January and February the All Share gained 36.5% and 15.3% respectively. However even these elated levels are dwarfed by most of the monthly gains achieved in 2020.

For example in the month of May the bourse rose by 141% before the government moved to suspend trading citing extensive speculation. In December the bourse rallied by 65.23% taking the bourse’s yearly gains to over 1000%.

The slowdown in gains as experienced in the month of March 2021 is however not always a bad thing. Zimbabwe experienced hyperinflation in 2019 and for most part of 2020. This resulted in a flight to safety as investors sought cover.

 Inflation reached a high of 830% before moderating in the final quarter of 2020. The hyperinflation is not new to Zimbabwe and send chills down the spine of Zimbabweans whenever prices are rocketing.

The surge in average prices were largely due to a weakening exchange rate, which devalued following a decision to liberalise the economy. The exchange rate which began 2020 at 1:20, closed the year at 1:82, a depreciation of over 70%.

Gains in the month under review were mainly skewed towards market heavies, although small caps maintained their gaining trajectory which is, however, still too marginal to effect a change on the overall bourse.

Furthermore, ZECO traded for the first time in 6 years, edging up by a whooping 50 percent to ZwL0.03 cents. The counter traded a total of 2.5 million shares worth $758.

Other notable risers were African Sun, up 24.4 percent to $2.36 and Padenga up 18.53 percent to $29.63.Delta, which recently concluded a deal to take up Mutare Bottling Company was up 14.11 percent to 46.22. Bindura was the period’s biggest loser down 18 percent to $4.38.

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