Runaway gains continue as Zimbabwe Stock Exchange soars

Zimbabwe Stock exchange continues to soar, with gains of 9.3% yesterday (14 September) in its industrial index which closed at 379.95, after climbing 10.3% on 13 September, its biggest one-day gain according to the Herald newspaper. Market capitalization by close of 14 September was US$10.7bn.

The industrial index opened the year at 144.53, so it has more than doubled with 163% gain. The mining index has climbed from 58.51 to close 14 September at 84.65, up 45%. Most of the gain in the industrial index comes in the last 3 months, as shown on African Markets website.

Turnover was $5.2m on 14 September, with foreigners buying $1.5m and selling $4.3m in 162 trades, according to the excellent ZSE website . Meanwhile the Herald newspaper reported turnover on 13 September at $9.0m was one of the highest for the year with foreigners selling $3.5m worth of shares and buying just above $104,000.

Biggest volume on 14 September was in Delta Corporation, which traded $2.0m worth of shares as the price climbed 44 cents (19.9%) to $2.6656 after hitting a year high of $2.6675. On 13 September it had climbed 13% in $2.37m worth of trading, according to the Herald. Barclays Bank traded $1.1m with a price gain of 0.52 cents to close at $0.0852, up 6.5%. Other strong gains were brickmaker Willdale, up 27% in the day to 1 cent ($0.0100) after climbing 58% on 13 September. CBZ Holdings, First Mutual Properties and Nampak Zimbabwe which each scored 20% gain, while Old Mutual was up 19.9%.

Starafricacorproation climbed 14% to close at 2.5 cents ($0.0250) after a reported 67% gain on 13 September, Other top risers on 13 September, according to the Herald, were agribusiness Ariston up 52%, Zimre Property Investment up 37% and hotelier African Sun up 20%.

Seed Co is reportedly seeking to raise $30m and list on a regional exchange. Fast foods retailer Simbisa brands continues to trade under cautionary that it plans to list on the London Stock Exchange AIM board.

A week ago the rally was already in full swing as the ZSE market capitalization reached $8bn and the industrial index hit 286.63. The Herald reported on 11 September “Local investors have been buying into the equity market as a hedge against currency uncertainties and shortages. Most cash-rich Zimbabwean companies and individuals have been failing to access their cash locked in banks due to foreign currency shortages. Business, especially manufacturers and mines, have also been struggling to make foreign payments since the foreign currency shortages intensified at the beginning of 2016. This is the cash that is now being deployed into the stock market, considered a safe haven by many.”

The newspaper reported one investor worried that cash holdings at the banks, even in foreign currency, would not represent fair value “Investors are thus looking at hedging against this loss of value by buying into stocks.”

This web report on Charles Rukuni’s Insider Zim also worries that it is a rerun of 2007: “A stock market running on fumes and not any real fundamentals, a currency crisis and signs of inflation? We have seen this all before. In 2007, just like today, the ZSE became the world’s best performing market. Shares were up close to 600% by mid-year in 2007. Year-on-year, by April 2007, the stock market had risen a massive 12,000%. We now know it was all a deception; it was only going up because investors had nowhere else to put their Zimbabwe dollars, whose worth was evaporating fast. Then, as now, it did not matter that a company was performing badly.”

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