·         VFEX All Share Index down -4% YTD

·         ZSE up 40% YTD

·         3 VFEX counters shed off at least 20%

Harare - The Victoria Falls Stock Exchange (VFEX) has been on a negative trajectory for close to five months now, and has succumbed to a -4% decline since the beginning of the year. This is inverse to the primary stock market, Zimbabwe Stock Exchange (ZSE), which has surged by a whopping 40% in US$ terms over the comparable period.

At least three counters on VFEX have declined by more than 20% since the beginning of the year, while two have dipped by more than 10%. Only three tickers have a positive year-to-date return, with two above 10%.

The bear run was triggered by a combination of factors, including slow-down in inflation, weak economic growth, and political uncertainty. US$ inflation, which was lately combined and coined as blended inflation, has been on a decline this year, which is reflective of a decrease in US$ prices in the overall market. This has prompted a repricing on the market as revenues are anticipated to be marginally lower than projected in US$ terms. Inflation is usually positively correlated to stock price movement as investors typically tend to hedge value in stocks which prompts a bull-run. The opposite is true as a deflation usually reduces investor appetite for safe haven.

At the same time, economic growth has been sluggish due to a number of factors that include global economic developments along with the inconsistent policy making in the country which has deterred potential investors. This has led to reduced consumer spending and investment activity, which has further dampened investor sentiment. Political uncertainty has also weighed on investor confidence as there are concerns about the upcoming elections and their potential impact on the economy.

The bear run was further exacerbated by a lack of liquidity in the market as investors were reluctant to buy stocks due to their concerns about the economy and political situation. This resulted in a sharp decline in stock prices across all sectors of the VFEX.

However, despite this bearish sentiment, some analysts believe that this could be an opportunity for long-term investors to buy stocks at discounted prices. They argue that once economic conditions improve and political uncertainty subsides, stock prices could rebound significantly from their current levels. As such, they recommend taking advantage of this opportunity while it lasts. The anticipated increase in listings on VFEX to fifteen by year-end is expected to also boost activity on the market which in-turn will result in more liquidity and demand in the long-run.

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