ZSE Market Commentary 03 May 2024
The ZSE was almost stable on Friday as the effects of constrained liquidity remain more pronounced on the stock market following the introduction of a new currency, ZiG, which replaced the ZWL. 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 trades, the mainstream All Share Index went up by a mild 0.06% to close at 98.29 points. Since the rebasing of indices, the All Share Index is down -1.7% in nominal terms, which translates to -1.6% in US$ terms.
The US$ denominated bourse, VFEX, partially recouped prior session’s losses as the oscillatory performance continues into the new month amid constrained liquidity in the economy. The mainstream VFEX All Share Index firmed by 0.48% today to close at 99.15 points, with gains driven by Padenga which outweighed 6 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 suffered a -1.4% loss in April, partially countering the 2.5% growth recorded in March. On a year-to-date basis, the All Share Index closed at a loss of -0.8% today. An aggregate of US$504,996 exchanged hands in today’s session, up from US$4,459 traded in the prior session.
On the currency markets, the Zimbabwe government introduced a new currency on the 5th of April 2024, backed by gold reserves and foreign currency. The Central Bank also announced new monetary policy measures on the same day, further tightening its stance on money supply while, however, slushing borrowing costs from 130% to 20%. The new MPS highlighted that the currency auction market has been replaced by the Interbank market, which will be used to liquidate all ZWL balances into Zimbabwe Gold (ZiG), the new currency. Today, the ZiG depreciated by -1% against the US$ to close at 13.55. The Central Bank computes the exchange rate by dividing the US$ by gold price per milligram.
An aggregate of 15 counters exchanged hands in today’s session, with 1 sailing stable while 7 emerged risers. Star Africa came out as the top performer on gaining 12.24% to settle at 0.83c, extending the gaining streak to an 8th straight session while Turnall partially recouped prior session’s losses on rising 9.08% to close at 2.54c. General Beltings buttressed prior session’s gains by a further 2.54% to settle at 5c, followed by OK Zim which reversed prior session’s performance on notching 1.37% to close at 54.76c. Beverages giant, Delta, went up for a 13th consecutive session by a further 0.37% to settle at 713.39c, capping off the Top 5 risers’ set.
On the downside, a total of 7 counters partially weighed on the market. ARTD performed the worst on plunging -11.31% to close at 8c, trailed by Dairibord which extended prior session’s losses by a further -10.75% to settle at 80.5c. Meikles fell for a 4th straight session by a further -1.27% to close at 235c while Willdale lost ground by -0.4% to settle at 5c. Econet extended losses to a 3rd consecutive session by a further -0.22% to close at 140.05c, capping off the Top 5 laggards’ pack.
Total turnover rose by 412% from prior session’s record to ZiG3.18 million today against a 262% increase in overall shares traded. NMBZ led turnover contributors in the session, contributing 60% of the aggregate turnover and was trailed by Econet, Meikles, Delta and SeedCo in that respective order. Foreign inflows contributed 1% to aggregate turnover in the session while outflows held a foothold of 26%.