• July 3, 2024
• Marketing @ C-TRADE
• Market Commentary

WEEKLY MARKET ROUND UP- : ZSE and VFEX Close Month of June in Positive Territory as ZiG Sharply Depreciates

• ZSE widens gains in June, climbs to record highs
• VFEX reached new record high as demand surged
• ZiG sharply depreciates as gold prices plunge

The ZSE climbed to a new record high in the week under review as increased local currency liquidity along with sustained exchange rate stability fueled a positive investor sentiment. This was also buttressed by the proposed 1-day trading which awaits approval along with reduced capital gains tax which further boosted morale of avid investors.

On a week-on-week basis to Friday, the ZSE All Share Index notched up 10.42% to close at 128.64 points, with gains spun across all the market’s main 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 28.6% in nominal terms, which converts to 27.4% in US$ terms. In June, the ZSE gained 27.3%, buttressing a nominal return of 2.28% garnered in May.

Despite a continued oscillatory trajectory, the US$ denominated bourse, VFEX, remained positive in the week under review amid hopes of increased liquidity on the market in the medium-term following the announcement of plans to turn the bourse into a pan-African hub this year. The mainstream VFEX All Share Index gained 2.13% in the week under review to close at a 4-month high of 102.69 points, with gains driven by 8 risers against 2 laggards. The All Share Index was rebased to 100 at the beginning of the year to account for the six listings in 2023. In the just ended month of June, the All Share Index has gained 5.6%, which compares to a -2.3% loss suffered in May. On a year-to-date basis, VFEX boasts of a mild 2.7% return. An aggregate of US$438,428 exchanged hands on VFEX in the week under review, down from US$776,401 traded in the previous week.

On the currency markets, the Zimbabwe government introduced the ZiG on the 5th of April 2024, backed by gold reserves and foreign currency reserves. 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 measures also saw the replacement of currency auction market with the Interbank market, which was used to liquidate all ZWL balances into ZiG. In the week under review, the ZiG depreciated by -0.82% against the US$ to close at 13.70. The exchange rate is computed by dividing the US$ by gold price per milligram.

An aggregate of 36 stocks exchanged hands in the week under review, with 23 emerging risers and these were led by ZBFH which gained 51.4% to settle at 280c. CBZ extended gains to a 3rd straight week on adding 46.8% to close at 734c, followed by AFDIS which buttressed prior week’s gains by a further 31.2% to settle at 459c. Unifreight firmed by 30.7% to close at 44c while Econet extended prior week’s gains by a further 27.8% to settle at 257c. TSL went up by 26.5% to close at 139c, trailed by Tanganda Tea Company which rose for a 3rd consecutive week by a further 25.5% to settle at 230c. CAFCA garnered a 22.3% growth to close at 760c while Bridgefort Capital settled at 2c after gaining 14.9%. BAT recouped prior week’s losses on rising 14.5% to settle at 2290c, capping off the Top 10 risers’ set.

On the downside, an aggregate of 8 counters partially countered risers, with ARTD performing the worst on slumping -14.9% to close at 8c. Fidelity reversed prior week’s gains on dipping -11.4% to settle at 105c, trailed by FMP which lost ground by -9.5% to close at 38c. Star Africa fell for a 3rd consecutive week by a further -8.3% to settle at 1c while EcoCash Holdings extended prior week’s losses to close at 19c. The duo of Turnall and Meikles set off prior week’s gains on easing -5.3% and -2.9% respectively to settle at 3c and 471c apiece. General Beltings shed off -0.4% to close at 5c, capping off the laggards’ pack.
Equity-Axis