WEEKLY MARKET ROUND UP- : ZSE and VFEX Recover Amid Improved Investor Sentiment as ZiG Sustains Stability
• ZSE partially recovers from bear-run amid improved investor sentiment
• VFEX recovers as activity improved amid increased listings
• ZiG strongly holds groung against the US$
The ZSE registered a mild recovery in the week under review despite sell-offs on Thursday, and partially recouped losses suffered in the recent bear-run as the sustained exchange rate stability drove investor morale. However, the magnitude of growth has remained stifled by tight liquidity as the Central Bank seeks to stabilize the new currency, ZiG, which replaced the ZWL.
On a week-on-week basis to Friday, the ZSE All Share Index firmed by a mild 0.68% to close at 94.65 points. 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 the share prices were also converted to ZiG at a rate of 2,498.65. Since then, the ZSE has lost -5.4% in nominal terms, which converts to -4.1% in US$ terms. Since the beginning of May, the market is down -4.2%, against a -4% loss suffered in April.
The US$ denominated bourse, VFEX, extended an oscillatory streak in the week under review as liquidity constraints continue to weigh on demand for stocks while general price stability, on the other hand, mildly boost investor morale. The mainstream VFEX All Share Index closed in negative territory, shedding off -0.22% to close at 98.74 points.
The All Share Index was rebased to 100 at the beginning of the year to account for the six listings in 2023. Since the beginning of May, VFEX has shed off -0.9%, against a -1.4% loss suffered in April. On a YTD basis, the VFEX All Share Index is down -1.3%. An aggregate of US$820,676 exchanged hands on VFEX in the week under review, up from US$317,259 traded in the previous week.
On the currency markets, the Zimbabwe government introduced a new currency on the 5th of April 2024, backed by gold reserves and foreign currency. The Central Bank also announced new monetary policy measures on the same day, further tightening its stance on money supply while, however, cutting borrowing costs from 130% to 20%. The new MPS highlighted that the currency auction market has been replaced by the Interbank market, which will be used to liquidate all ZWL balances into Zimbabwe Gold (ZiG), the new currency. In the week under review, the ZiG appreciated by 0.03% against the US$ to close at 13.40. The exchange rate is computed by dividing the US$ by gold price per milligram.
Share Price Performance
An aggregate of 31 stocks exchanged hands in the week under review, with 12 emerging risers and these were led by SeedCo which gained 19.8% to settle at 168c. NMBZ extended gains to a 3rd straight week on rising 15% to close at 166c, followed by the duo of associate companies, FML and FMP, which each partially recouped prior week’s losses on notching 12.8% and 6.2% apiece to settle at 185c and 28c respectively.
The duo of Meikles and AFDIS reversed prior week’s losses on surging 4.9% and 3% each to close at 231c and 225c in that respective order while Tanganda Tea Company mildly inched by 2.9% to settle at 185c. RTG rose for a 3rd consecutive week by a further 1.2% to close at 21c, followed by Hippo which firmed by 1.1% to settle at 354c. CBZ went up by 0.1% to settle at 360c, capping off the risers’ set.
On the downside, an aggregate of 13 counters partially countered risers, with Willdale performing the worst on dipping -34.4% to close at 3c. Star Africa set off prior week’s gains on slumping -16.1% to settle at 1c, trailed by Proplastics which extended prior week’s losses by a further -15% to close at 38c. Fidelity reversed prior week’s gains on dwindling -12.1% to settle at 58c while OK Zim fell for a 3rd straight week by a further -7.3% to close at 50c.
The duo of Mashhold and BAT extended prior week’s losses by a further -5.8% and -3.8% apiece to settle at 13c and 2500c respectively. Econet fell for a 5th consecutive week by a further -1.8% to close at 126c while EcoCash extended losses to a 3rd straight week, easing -1.7% to settle at 21c. General Beltings shed off -0.2% to close at 5c, capping off the Top 10 laggards’ pack. EQUITY-AXIS.