The Zimbabwe Stock Exchange (ZSE) tumbled further during the week ended August 9, 2019, losing $769 million (-3.17%) in total market capitalisation to close the week at $23,52billion. This comes as a big surprise given that a number of new measures delivered by Finance and Economic Development minister Professor Mthuli Ncube during the mid-year fiscal review and supplementary budget will likely drive inflation in the short to medium term.
The review of the excise duty on fuel, which saw the increase in the price of fuel together with the increase in the electricity tariff, is likely to have ripple effects on pricing across value chains, greatly affecting the already stressed consumer whose pocket has not been able to keep up with inflation.
Depressed consumer demand aside, in such an inflationary environment, we expect funds to continue to move from monetary assets (which are yielding negative real returns) on to the stock market (in search of better value preservation assets).
During the week, all equity gauges except for the Mining Index traded in the negative: the All Share Index and the Industrial Index retreated 2,48% and 2,51% to close at 180.05 points and 600.56 points respectively while the Top 10 Index ended the week 3,53% lower at 166.67 points. The Mining Index gained a marginal 0,09% to 244.79points. Year-to date, the market is up 23,12% as measured by the All Share Index.
Old Mutual Limited led the risers, gaining 23,09% last week to settle at $21,3589 as 297,700 shares worth $5 973 505 traded. The rising premium is likely due to rising demand from foreigners as vested shares continue to dry up in the market. The biggest loser for the second week in a row was Willdale, dropping 31,20% (after losing 28,57% during the previous week). It interesting to note that the share price of crocodile skin producer, Padenga Holdings remained unchanged despite an announcement that it intends to acquire a 50,1% stake in Dallaglio Investments, an export oriented company in the gold mining sector valued at around US$50 million for a consideration of the equivalent of US$20 million. The transaction will be put to vote at an extraordinary general meeting for Padenga shareholders on August 28, 2019.
Volumes activity last week was largely dominated by trades in CBZ Holdings Limited which contributed 16,29% to total volumes. During the week, a total of 20 665 700 shares changed hands, a 37,91% decline from the previous trading week. Total turnover for the week was $26 971 706, a 7,88% decline from the previous week. Turnover was largely dominated by activity in Old Mutual Limited (22,15%) and Delta Corporation (19,14%). It’s worth noting that the last day of trading week saw renewed buyer interest, pushing the market up, a trend we anticipate will continue into the new week.
Fungai Nyaungwa is an equities analyst.