ZSE Market Commentary 19 Mach 2024
ZSE rises further as Fewsnet warns poor harvest, EXR instability will impact economy hard
HARARE – While exchange rate volatility and ZWL devaluation are expected to be addressed in the Reserve Bank of Zimbabwe’s 2024 monetary policy statement, which is due to be presented “soon,” the Famine Early Warning Systems Network (Fewsnet) has warned that the expected poor harvest is expected to impact household food access throughout the post-harvest period, along with high food prices and limited access to income earning opportunities.
This, according to Fewsnet’s latest outlook report (February–September 2024), will strain the economy. USD price increases for basic commodities are anticipated, impacting household purchasing power, while at the same time, high fuel and transportation costs may negatively affect livelihoods and market access, especially for poor households.
In addition, engagement in informal artisanal mining is expected to increase, while typical sources of income are projected to remain below normal.
According to the report, because of the poor harvest and high food prices, one in five households is likely to be in severe crisis due to limited access to income. This is despite government-announced efforts to mitigate against the poor maize harvest, which is now projected below 1 million tonnes.
“Exchange rate instability and ZWL devaluation are expected to impact food prices and market conduct,” noted the report. The ZWL is now being quoted at 22000–24000 on the alternative market, and as such, inflation is projected to continue rising, with food inflation being a significant driver.
Meanwhile, Zimbabwe Stock Exchange shares extended gains at the start of the week as investors continued to anticipate the MPS, which will give currency and exchange rate direction. The All Share Index remained in record territory after rising 7.43% to 667 849.02 in a session that yielded 18 risers with no stocks trading in the negative.
A total of 257 trades were recorded after 2.38 million shares exchanged hands. Turnover was at $6.95 billion, the bulk of which came from Econet at $4.44 billion.
The Top Ten Index jumped 8.64% to 307 868.65. Delta gained 15% to 1 335 303.99c and CBZ also rose by the same to 977 265c taking its market cap to US$291.74 million. Volume and value leader Econet put on 1.92% to 281 152.96c as investors continued to cheer the interim dividend, while EcoCash was 1.31% higher to 59 987.16c.
The Medium Cap put on 2.21% to 2 419 502.77. Cafca, Dairibord and ZB all hit limit up to 1 552 500c, 126 500c and 304 175c respectively. Tanganda jumped 14.99% to 296 535c with a year to date gain of 209.86% Willdale was 0.91% higher to 5045.68c ahead of an EGM to approve its recapitalisation plan, which includes the sale of idle land.
Bridgefort Capital was the day’s leading stock with a 21.43% gain to 8500c. As a result, the Small Cap Index put on 0.26%.
VFEX turnover was subdued at US$48 190.51 after 612 451 shares traded. The All Share added 0.39% to 95.88. Padenga led the risers with a 7.33% gain to 14.05 US cents. Innscor put on 1.61% to 44.74 US cents, and Natfoods added a marginal 0.44% to 127.56 US cents.
Axia was the worst performer after losing 11.38% to 7.09 US cents and struggling miner Bindura shed 1.82% to 1.08 US cents.=finx