WEEKLY MARKET ROUND UP- : ZSE Significantly Recovers as VFEX Plunges Amid Exchange Rate Appreciation
• ZSE leverages on exchange rate stability, substantially recovers from recent bear-run
• VFEX oscillates back in losses amid liquidity constraints
• ZiG sustains momentum as gold price escalates
The ZSE buttressed prior week’s gains in the week under review, significantly recovering from recent bear-run as prolonged exchange stability and a mild increase in liquidity following the disbursement of ZiG denominated wages boosted investor sentiment. On a week-on-week basis to Friday, the ZSE All Share Index surged by 5.09% to close at 99.47 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 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. Since then, the ZSE has lost -0.5% in nominal terms, which converts to a positive 2.1% in US$ terms amid notable exchange rate appreciation in favour of the ZiG. On a month-to-date basis, the ZSE is up 0.7% and 2.2% in nominal and US$ terms respectively.
The US$ denominated bourse, VFEX, remained oscillatory in the week under review amid constrained liquidity, reversing prior week’s gains as activity slowed down. The mainstream VFEX All Share Index retreated by -3.42% to close at a 4-week low of 95.72 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 -3.9%, against a -1.4% loss suffered in April. Performance in the week under review was driven by 6 laggards which outweighed 3 risers. On a YTD basis, the VFEX All Share Index is down -4.3%. An aggregate of US$1,161,707 exchanged hands on VFEX in the week under review, up from US$820,676 traded in the previous week.
On the currency markets, the Zimbabwe government introduced a new currency on the 5th of April 2024, backed by gold reserves and foreign currency. The Central Bank also announced new monetary policy measures on the same day, further tightening its stance on money supply while, however, cutting borrowing costs from 130% to 20%.
The new MPS highlighted that the currency auction market has been replaced by the Interbank market, which will be used to liquidate all ZWL balances into Zimbabwe Gold (ZiG), the new currency. In the week under review, the ZiG appreciated by 1.31% against the US$ to close at 13.22. The exchange rate is computed by dividing the US$ by gold price per milligram.
Share Price Performance
An aggregate of 33 stocks exchanged hands in the week under review, with 15 emerging risers and these were led by Willdale which went up by 52.4% to settle at 4c. Econet recouped prior week’s losses on rising 43% to close at 180c, followed by FMP which buttressed prior week’s gains by a further 31% to settle at 36c.
Fidelity set off prior week’s losses on gaining 13.8% to close at 66c while Hippo extended prior week’s gains by a further 13% to settle at 400c. Meikles buttressed prior week’s gains by a further 10.5% to close at 255c, trailed by Proplastics which partially reversed prior week’s losses on notching 9.6% to settle at 42c. FML extended prior week’s gains by a further 8.1% to close at 200c while CFI firmed by 7.7% to settle at 140c. NMBZ extended gains to a 4th straight week on garnering a 4.4% growth to settle at 173c, capping off the risers’ set.
On the downside, an aggregate of 12 counters partially countered risers, with EcoCash Holdings performing the worst on plunging -22.6% to close at 16c. Star Africa extended prior week’s losses by a further -11.7% to settle at 1c, trailed by OK Zim which fell for a 4th consecutive week by a further -10% to close at 45c. FBCH lost ground by -4.5% to settle at 183c while ZHL extended prior week’s losses by a further -3.2% to close at 37c.
Turnall shed off -1.8% to settle at 3c, followed by ZBFH which closed at 185c after retreating by -1.1%. Zimpapers softened by -1% to settle at 4c while BAT extended the negative streak to a 4th straight week on easing -0.7% to close at 2482c. General Beltings extended prior week’s losses by a further -0.2% to close at 5c, capping off the Top 10 laggards’ pack.-EQUITY-AXIS