What’s Up on Zimbabwe Stock Exchange?

The useful businessdigest of the Zimbabwe Independent (www.theindependent.co.zw) newspaper has published two revealing interviews by Paul Nyakazeya with the CEO of the ZSE, Emmanuel Munyukwi, and the CEO of the Securities and Exchange Commission, Alban Chirume, as well as other market experts on the trends and undercurrents on the Zimbabwe Stock Exchange (www.zse.co.zw) in 2010 and 2011. Here are some extracts:

The Stock Exchange CEO
ZSE CEO Emmanuel Munyukwi says in his interview that 2010 could have been “a much better year” compared to 2009 had it not been for the indigenisation regulations gazetted in March. Munyukwi said the market was bullish in the first quarter, trading was mixed after the empowerment regulations were announced, but it recovered in the last quarter: “In April we raked in about US$5 million while months before that we were raking in more than US$20 million a month. Since the regulations were gazetted, we have seen a negative impact on trade.”
Munyukwi said he had endured a stressful time during Zimbabwe’s lost decade keeping interest alive in a stock market disconnected from the rest of the world. This year “the market performed better, some counters that most investors would not buy on the first go performed really well.” He forecast that market capitalisation could end 2010 above US$4 billion not much change on the year which opened at US$3.97 bn.

The market in brief (figures Zimbabwe Independent):
From 4 January to 30 November a total of 6.2 billion shares were traded worth US$3.6 billion. Foreign buying was US$1.1 million against foreign selling of US$0.17 million. Beverages giant Delta Corporation had the biggest market capitalisation at US$731 million, followed by Econet Wireless Zimbabwe (US$435 mn) and Innscor Private US$292 mln).

ZSE Winners.. (year to 17 December)
National Tyre Service: up 140%
DZL & Zimplow: up 120%
Colcom: up 118%
Hwange: up 114%

..and Losers (year to 17 December)
PG Industries: down 69%
African Sun: down 78.3%
RedStar: down 80%
TN Holdings: down 83.6%
Zeco: down 85%

The Economist
Economist David Mupamhadzi told businessdigest that the performance of the ZSE will continue to be driven by the performance of the economy. The anticipated strong performance of most key sectors of the economy in 2011 would boost the market.
“However, political developments will also play a big role in influencing the performance of the ZSE.” He said reports of an election in 2011 could encourage some investors to “wait and see” and added: “Furthermore, depending on the prevailing political conditions, especially linked to the constitution, referendum and the much talked-about elections, the ZSE could take a serious hammering if there is no peace and stability in the country.”

The Regulator
SEC CEO Alban Chirume (AC) from his interview on the benefits of demutualizing the ZSE:
“We are interested in the reform of the exchange by way of complying with the Act and SI (Statutory Instrument) 100 of 2010. Corporatisation of the exchange which will result in the separation of trading rights, ownership and management (independent board and executive management) will meet the requirements of our regulations. We are keen to see that process moving faster. The stock exchange can advise where it is and when they expect the process (of demutualisation) to be completed… The current status could be working to the detriment of the market. Liquidity inflow is also a function of the confidence that investors have in a market. We need to build that confidence ourselves.”

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