ZSE Market Commentary 25 April 2024
ZSE and VFEX Sustain Positive Momentum as ZiG Devalues for the First Time
The ZSE sustained growth on Thursday, significantly recovering from sell-offs that followed the introduction of a new currency, ZiG, along with contractionary monetary policy measures. In-line with the aforementioned 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 gained 1.56% to close at 98.76 points. Since the rebasing of indices, the All Share Index is down -1.2% in nominal terms, which translates to a positive 0.2% in US$ terms amid a sustained appreciation of the ZiG since then.
The US$ denominated bourse, VFEX, buttressed prior session’s gains, partially recouping losses suffered in the recent bear run. The recovery is attributed to improved investor sentiment in the country amid a gradually increasing confidence in new monetary policy measures. The mainstream VFEX All Share Index firmed by 1.56% today to close at 95.84 points, with gains driven by 5 risers which outweighed 7 laggards. 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 -5.2% 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 -4.2% today. An aggregate of US$81,290 exchanged hands in today’s session, up from US$78,135 traded in the prior session.
On the currency markets, the Zimbabwe government introduced a new currency on the 5th of April 2024, backed by gold reserves and foreign currency. The Central Bank also announced new monetary policy measures on the same day, further tightening its stance on money supply while, however, slushing borrowing costs from 130% to 20%. The new MPS highlighted that the currency auction market has been replaced by the Interbank market, which will be used to liquidate all ZWL balances into Zimbabwe Gold (ZiG), the new currency. Today, the ZiG depreciated by 1% against the US$ to close at 13.38. The exchange rate is computed by dividing the US$ by gold price per milligram. Today’s performance marks the unit’s first devaluation on the interbank since inception, while parallel rate continues to devalue.
An aggregate of 18 counters exchanged hands in today’s session, with 3 sailing stable while 9 emerged risers. Star Africa came out as the top performer for a 3rd consecutive session on surging 45.09% to settle at 0.65c, followed by Willdale which went up for a 3rd straight session by a further 9.56% to close at 5.50c. ZHL firmed by 8.1% to settle at 28c while beverages giant, Delta, extended gains to an 8th consecutive session on rising 6.36% to close at 703.15c.EcoCash Holdings buttressed prior session’s gains by a further 2.23% to settle at 31.04c, 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 plunging -13.75% to close at 150.08c, reversing prior session’s gains while General Beltings lost ground by -8.26% to settle at 5c. Hippo extended prior session’s losses by a further -7.39% to close at 350.05c, trailed by CFI which shed off -5.48% to settle at 130.05c. Econet fell for a 4th straight session by a further -2.85% to close at 140.87c, capping off the Top 5 laggards’ pack.
EQUITY AXIS