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Equities outperform inflation rate


ZSE worst performing in Sadc



A NEW report has revealed that the Zimbabwe Stock Exchange (ZSE) was the worst-performing bourse in the southern African region after the government rolled out several measures curtailing trading on the equities market.


Official figures show that the local equities market, the ZSE in particular, outperformed regional markets in 2021, growing 123% year-onyear in real terms.

The market continued its bull run through the initial months of 2022, with market capitalisation growing 194% in nominal terms to the end of April, powered by increases in money supply.

Year-to-date inflation stood at 38% within the same period, extending gains made in real terms. However, faced with a spiralling currency the government subsequently introduced measures across the board to restore sanity to markets.

“As per Government reports, the ZSE was seen to be serving as a conduit for speculative behaviour and a raft of measures was thereafter introduced. SI [Statutory Instrument] 96 of 2022 increased withholding tax for shares held less than 180 days from 2% to 4% whilst capital gains tax for short-term investors was hiked to a draconian 40%,” Inter-Horizon Securities says in its latest research note.

“Additionally, third-party payments into client’s trading accounts were also prohibited whilst reporting standards for brokers were also upped. The ZSE to FY22 [full-year 2022] consequently shed off 75% of value in real terms pivoting to become the worst performer in the region.”

IH Securities says whilst valuations had become attractive again on the ZSE in the second half of 2022 with market capitalisation trading at a nearly 50% discount to its historical average of US$4 billion, contractionary measures instituted by the central bank ensured a liquidity crunch compounded downward pressure on prices.

 “The ZSE closed the year trading at an average P/E [price-to-earnings ratio] of 5.15x versus its own 3-year average of 6.12x and peers at 8.6x. Whilst there is room for upside in the local market, it is worth noting the Zimbabwean market trades at a discount to regional peers,” the report reads.

Activity in the second half of 2022 on the ZSE was muted, with value traded retreating 45% relative to the first half to US$92.89 million.

Total value traded on the ZSE was down 14.3% yearon-year whilst average daily traded fell 22.8% relative to 2021. Econet, Delta and Innscor were the most liquid stocks in the period under review.

Volumes slowed 36.3% year-on-year, with 2.3 billion shares trading hands within the year. Whilst the market closed the year 80.13% ahead in nominal terms, only four counters in the universe ended the year with net positive real returns (Zeco, NMB, FCB and CFI).

Towards the tail-end of the year, National Foods and Simbisa moved their listings from the ZSE in favour of the Victoria Falls Stock Exchange.

Delta (US$494 million) and Innscor closed the year as the most valuable companies whilst Econet slid from pole position in 2021 to third place.

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