ZSE Market Commentary 23 April 2024
ZSE Sustains Gains as VFEX Takes a Dive Amid Liquidity Constraints
The ZSE was almost stable on Tuesday amid liquidity constraints following the introduction of a new currency, the ZiG, as well as a contractionary monetary policy. In-line with the change in the local currency, the ZSE changed its functional currency to ZiG, and rebased all indices to 100 on the 8th of April in a bid to effectively reflect the effect of the new currency on financial markets.
Likewise, all share prices were also converted to ZiG at a rate of 2,498.65 upon introduction. In today’s session, the mainstream All Share Index inched up by a mild 0.15% to close at 96.47 points. Since the rebasing of indices, the All Share Index is down -3.5% in nominal terms, which converts to -1.2% in US$ terms amid a sustained appreciation of the ZiG since then.
The US$ denominated bourse, VFEX, extended bear run to a 5th consecutive session as subdued liquidity and uncertainties induced heightened sell-offs. The mainstream VFEX All Share Index fell by a further -1.38% to close at 93.42 points, with losses driven by 6 laggards while there were no risers. The All Share Index was rebased to 100 at the end of 2023 following the addition of six new listings in 2023. The bourse has suffered a -7.6% loss since the beginning of April, countering a growth of 2.5% recorded in March. On a year-to-date basis, the All Share Index closed at a loss of -6.6% today. An aggregate of US$118,455 exchanged hands in today’s session, up from US$19,225 traded in the prior session.
On the currency markets, the Zimbabwe government introduced a new currency on the 5th of April 2024, backed by gold reserves and foreign currency. The Central Bank also announced new monetary policy measures on the same day, further tightening its stance on money supply while, however, slushing borrowing costs from 130% to 20%. The new MPS highlighted that the currency auction market has been replaced by the Interbank market, which will be used to liquidate all ZWL balances into Zimbabwe Gold (ZiG), the new currency. Today, the ZiG appreciated by 0.27% against the US$ to close at 13.25. The exchange rate is computed by dividing the US$ by gold price per milligram.
An aggregate of 17 counters exchanged hands in today’s session, with 2 sailing stable while 9 emerging risers. Star Africa came out as the top performer in the session on rising 77.65% to settle at 0.36c, countering prior session’s performance while Proplastics closed at 56.74c after gaining 9.63%, reversing prior session’s losses. Nampak recouped prior session’s losses on surging 5.64% to settle at 50.52c, followed by Willdale which went up 1.9% to close at 5.01c. Beverages giant, Delta, extended gains to a 6th straight session on notching 1.52% to settle at 649.18c, capping off the Top 5 risers’ set.
On the downside, a total of 6 counters partially weighed on the market. SeedCo performed the worst in the session on slumping -10.02% to close at 157.42c, extending prior session’s losses while OK Zim partially set off prior session’s gains on softening -5.8% to settle at 55.23c. Ariston fell for a 3rd consecutive session by a further -2% to close at 4.90c, trailed by EcoCash Holdings which reversed prior session’s gains on retreating -1.69% to settle at 29.98c. Meikles countered prior session’s gains on dipping -1.45% to close at 243.37c, capping off the Top 5 laggards’ pack.
Total turnover rose by 10% from prior session’s record to ZiG1.27 million today despite a -65% decline in overall shares traded. Delta led turnover contributors in the session, contributing 56% of the aggregate turnover and was trailed by Econet, Proplastics, Masimba and OK Zim in that respective order. Foreign inflows contributed 1.4% to aggregate turnover in the session while outflows held a foothold of 45.8%.
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