market report:WITH MUTANDANI MAKUYANA
Reflecting on the prevailing difficult economic conditions amid continued uncertainty, the Zimbabwe Stock Exchange (ZSE) market traded largely mixed during the month of October. Activity was subdued during the first half of the month, whilst renewed buying interest especially in the blue chips stocks and property counters saw the market recovering somewhat towards the end of the month. In terms of market capitalisation, the overall value of the market declined by a marginal 0.45% to close the month of October 2019 at ZWL$30.39 billion, down from the September 2019 closing level of ZWL$30.53 billion.
Generally, the stock exchange serves as a barometer of a nation’s economic activity, given the assumed correlation between gross domestic product growth and stock market returns. Although fundamentally, security prices are expected to rise during upbeat economic and business periods, and fall during economic stagnation, the level of activity on the ZSE market has of late largely been driven by speculative tendencies, in the midst of continued macro-economic instability.
On monthly basis, the All-Share Index advanced by 0.15% to close the month at 232.86 points while the Industrial Index followed suit, putting on 0.38% to end at 777.48 points. The Top 10 Index, however, lost 1.71% to finish lower at 214.37 points, while the Mining Index dipped by a notable 13.04% dragged down by Bindura Nickel, which lost 28% to close the month lower at $0.13. On a year to date basis, the overall market as measured by the All-share Index surged by 61.28%, a return, which is averagely well above the peer market returns, although real returns remains negative given the high level of inflation.
Meanwhile, the stock market remains one of the alternative market to place investments for value preservation and as a hedge against the rising inflation.
Leading monthly top performers were counters such as Ariston, up 124.12% to end the month at $0.19, followed by Medtech which put on 58.33%, and Dairibord which gained 51.01%, while Powerspeed and Old Mutual advanced by 50% and 44.8%, respectively. Offsetting the monthly gains, were losses realised in the likes of Seedco, which dipped by 28.18%, Bindura lost 27.78% and First Capital Bank shed 22.18%, while the duo of NMB and Cassava eased 12.54% and 11.55%, correspondingly.
In the short term outlook, the pronouncements of the upcoming 2020 national budget statement will be key in providing further guidance with regards to the economic and investment front. Meanwhile, economic and investment policies should be continually inclined towards building confidence that is ultimately key in attracting fresh investment and foreign direct investment, as well as mobilising local investment.
l Mutandani Makuyana is an equities analyst.
(Head of Research- Invictus Securities Zimbabwe)
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