ZSE Market Commentary 06 May 2024
The ZSE reversed prior session’s gains in early week gains, reaching a 1-week low as liquidity constraints continue to dwindle overall activity in the economy following the introduction of a new currency, the 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 slumped by -0.5% to close at 97.8 points. Since the rebasing of indices, the All Share Index is down -2.2% in nominal terms, which translates to -2.1% in US$ terms.
The US$ denominated bourse, VFEX, opened the new week in negative territory, plunging to a 1-week low and reversing prior session’s gains as activity significantly slowed-down owing to tight liquidity. The mainstream VFEX All Share Index retreated by -1.48% to close at 97.68 points, with losses driven by 5 laggards which outweighed 2 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 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 -2.3% today. An aggregate of US$29,910 exchanged hands in today’s session, down from US$504,996 traded in the prior session.
On the currency markets, the Zimbabwe government introduced a new currency on the 5th of April 2024, backed by gold reserves and foreign currency. The Central Bank also announced new monetary policy measures on the same day, further tightening its stance on money supply while, however, slushing borrowing costs from 130% to 20%. The new MPS highlighted that the currency auction market has been replaced by the Interbank market, which will be used to liquidate all ZWL balances into Zimbabwe Gold (ZiG), the new currency. Today, the ZiG depreciated by -0.89% against the US$ to close at 13.68. The Central Bank computes the exchange rate by dividing the US$ by gold price per milligram.
An aggregate of 24 counters exchanged hands in today’s session, with 6 sailing stable while 11 weighed on the market. Nampak performed the worst on plunging -10% to close at 45c, trailed by Dairibord which extended losses to a 3rd straight session by a further -6.09% to settle at 75.59c. FMP lost ground by -5.65% to close at 30.05c while Meikles fell for a 5th consecutive session by a further -4.21% to settle at 225.12c. EcoCash Holdings set off prior session’s gains on easing -2.44% to close at 28c, capping off the Top 5 laggards’ set.
On the upside, a total of 7 counters partially countered the laggards. CBZ emerged the top performer in the session on surging 1.46% to settle at 365.25c, followed by Star Africa which extended gains to a 9th straight session by a further 1.31% to close at 0.84c. SeedCo recouped prior session’s losses on rising 1.18% to settle at 126.51c while Ariston firmed by 0.68% to close at 4.83c. General Beltings went up for a 3rd consecutive session by a further 0.04% to settle at 5c, capping off the Top 5 risers’ pack.
Total turnover fell by -23% from prior session’s record to ZiG2.44 million today against a -37% decline in overall shares traded. FBCH led turnover contributors in the session, contributing 36% of the aggregate turnover and was trailed by Delta, Econet, Tanganda Tea Company and SeedCo in that respective order. Foreign inflows contributed 1.7% to aggregate turnover in the session while outflows held a foothold of 3.3%.EQUITY-AXIS