• June 18, 2024
• Marketing @ C-TRADE
• Market Commentary

WEEKLY MARKET ROUND UP- : ZSE and VFEX on a Positive Note Amid Expected Policy Changes

• ZSE sets new record high amid an announcement to scrap capital gains
• VFEX sustains positive momentum despite oscillatory performance
• ZiG remains in positive territory against US$ since inception, despite recent depreciation

The ZSE climbed to a new record high in the week under review following news of an expected removal of capital gains tax, a decision that incentivizes avid investors. Despite a see-saw performance throughout the week, amid profit-taking induced sell-offs earlier in the week, the ZSE All Share Index gained 4.34% week-on-week to Friday to close at 110.7 points. Gains were evenly spun between market heavies and medium caps while penny stocks remain constant since the rebasing of indices. 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 gained 10.7% in nominal terms, which converts to 11.4% in US$ terms. On a month-to-date basis, the ZSE is up 9.5%, buttressing a nominal return of 2.28% garnered in May.

The US$ denominated bourse, VFEX, closed in positive territory in the week under review despite a sustained oscillatory performance, extending prior week’s gains. This follows an announcement about plans to turn the bourse into a pan-African trading hub this year, including the trading of African commodities and currencies. The mainstream VFEX All Share Index notched by a mild 0.62% to close at 101.2 points, with gains driven by 3 risers which outweighed 5 laggards. 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 June, the All Share Index has gained 4%, which compares to a -2.3% loss suffered in May. On a year-to-date basis, VFEX boasts of a mild 1.2% return. An aggregate of US$727,415 exchanged hands on VFEX in the week under review, up from US$1,543,187 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 depreciated by -0.37% against the US$ to close at 13.48. The exchange rate is computed by dividing the US$ by gold price per milligram.

An aggregate of 31 stocks exchanged hands in the week under review, with 20 emerging risers and these were led by the duo of Proplastics and Unifreight which surged 28.3% each to settle at 48c and 33c respectively. Meikles extended gains to a 5th straight week on rising 25.9% to close at 480c, followed by Fidelity which rose for a 4th consecutive week by a further 19.8% to settle at 103c. The duo of RTG and CFI firmed by 17.6% and 14.2% respectively to close at 25c and 160c in that order while FMP extended gains to a 5th straight week on notching 13.5% to settle at 42c. OK Zim buttressed prior week’s gains by a further 11.1% to settle at 50c, trailed by Delta which rose for a 4th consecutive week by a further 9.4% to close at 910c. FBCH recouped prior week’s losses on gaining 5.8% to settle at 195c, capping off the Top 10 risers’ set.

On the downside, an aggregate of 10 counters partially countered risers, with Willdale performing the worst on plunging -11.1% to close at 4c. Econet set off prior week’s gains on dipping -7.8% to settle at 167c, trailed by ZBFH which extended prior week’s losses by a further -5.8% to close at 179c. SeedCo reversed prior week’s gains on retreating -1.4% to settle at 170c while the duo of ARTD and Star Africa shed off -1% each to close at 8c and 1c respectively. Nampak and BAT eased by -0.7% apiece to close at 44c and 2185c in that order while Mashhold partially reversed prior week’s gains on softening -0.2% to settle at 14c. Hippo partially countered prior week’s gains on easing -0.01% to close at 483c, capping off the laggards’ pack.-Equity-Axis