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ZSE rues indigenisation effects

ZSE CEO Emmanuel Munyukwi says this year could have been “a much better year” compared to 2009 had it not been for the indigenisation regulations gazetted in March.

Munyukwi said the market was bullish in the first quarter, traded in the mix after the empowerment regulations were announced, but recovered in the last quarter of this year.
“In April we raked in about US$5 million while months before that we were raking in more than US$20 million a month. Since the regulations were gazette, we have seen a negative impact on trade,” he said.
Munyukwi said he had endured a stressful time during Zimbabwe’s lost decade keeping “interest alive” in a stock market increasingly disconnected from the rest of the world.
Hyperinflation, peaking far north of the last official rate of 231-million percent in July 2008, a government driven by political expediency and a currency in freefall were just some of the other headaches for Munyukwi.
“We could afford much sleep this year. The market performed better, some counters that most investors would not buy on the first go performed really well,” Munyukwi said.
He said the market’s capitalisation could end this year above US$4 billion. The market’s capitalisation opened the year at US$3,97 billion.
“Last year our market was driven by foreigners, making up to about 45 -50% of the total turnover of about US$200 million on the ZSE,” Munyukwi said.
As of last Friday, National Tyre Service led the year on year gains at 140%. DZL and Zimplow achieved a growth of 120%, while Colcom and Hwange recorded 118% and 114%.
The top five that traded in the red in the year to date where Zeco -85%, TN Holdings -83,6%, RedStar -80%, African Sun -78,3% and PG Industries -69%.
Beverages giant, Delta Corporation, is still the market leader with a market capitalisation of US$731,4 million, followed by Econet Wireless Zimbabwe and Innscor Private Limited with US$435,4 million and US$291,6 million, respectively.
The top 10 performers had a total market capitalisation of US$2, 59 billion, accounting for about 65,9% of the local bourse. From January 4 to November 30, a total of 6,2 billion shares were traded worth US$3,6 billion.
Foreign buying during the period totaled US$1,1 million against foreign selling of US$171 869 during the same period.
Analysts said the gains and losses reflected a market which was in line with the rest of the world.
While the country’s economy was crumbling before dollarisation, the Zimbabwean speculator’s earning where above inflation, keeping up much better than ordinary citizens.
“Events that stimulate Gross Domestic Product (GDP), a country’s wealth, inevitably drives stock prices up, and any event that hurts GDP growth, pulls stock prices down. The opposite has, however, been happening as Zimbabwe share prices were rising while the economy continued to be depressed,” Munyukwi said.
Presenting the 2011 National budget, Finance minister Tendai Biti said the local bourse had been rather “subdued” for the greater part of the year saying “the revival of the economy coupled with the modest improvements in industrial capacity utilisation has not significantly spurred activity on the Zimbabwe Stock Exchange”.
“Rather negative investor perceptions coupled with persistent liquidity challenges continue to subdue trading on the ZSE over the period to August,” Biti said. Foreign investors maintained the lead with their participation increasing from an average of 20% in August to about 40% and 50% of total shares in September and October.
Economist David Mupamhadzi told businessdigest that the performance of the ZSE will continue to be driven by the performance of the economy saying an anticipated strong performance of most key sectors of the economy in 2011 would help buoy the ZSE.
“However, political developments will also play a big role in influencing the performance of the ZSE. Reports of an election in 2011, could force a number of investors to adopt a wait and see attitude,” he said.
“Furthermore, depending on the prevailing political conditions, especially linked to the constitution, referendum and the much talked about elections, the ZSE could take a serious hammering if there is no peace and stability in the country.”
See tables of market risers market losers.


Paul Nyakazeya

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