Zim Stock Exchange (ZSE) On The Rebound As Foreigners Buy More Shares

The self correction we were witnessing on the Zimbabwe Stock Exchange (ZSE) seems to be over as the ZSE is now rising.

The stock market capitalisation had reached $15 billion just before the military takeover as investors panic bought shares. As was warned by analysts the capitalisation fell from $15 billion to around $9 billion as prices self corrected following the resignation of Mugabe and swearing in of President Mnangagwa.

The slide has stopped and in the week ending 1 December, there actually was growth on the stock market.

Both the mining and industrial indices performed better than the preceding week. The mining index was up 0.18% compared to the week ending 2 November. That may seem like a small change but considering that this index was not as affected by the self correction it becomes impressive.

The industrial index was up 17.36% compared to the week ending 24 November despite losing 0.72% on the last day of that week. The heavyweights, Delta, Econet and Old Mutual all gained in the week.

As a result, ZSE market capitalisation increased to about $10.7 billion.

Foreigners

Foreigners seem to be confident that the ZSE is safe to invest on now as they were net buyers throughout the week.

On Wednesday 29 November, they bought shares worth $2.1 million compared to sales of $1.6 million. The turnover for that day was $5.5 million which means foreigners were responsible for 38% of the trade.

Thursday saw foreign buys increase to $3.1 million compared to sales of $1 million. It was a busy day however for locals as total turnover was $12.4 million. This means on the day, despite foreigners buying more than the previous day, they were responsible for 25% of the trade, down from 38% on Wednesday.

On the last day of the week, Friday 1 December, trade volumes were low. Turnover dropped from $12.4 million on Thursday to just less than $2.4 million. Foreigners were still net buyers on the day, with buys of $239,464.71 compared to sales of $210,000.00.

On the whole there seems to be confidence in the economy as evidenced by the activity on the ZSE and also the falling USD to Bond note rate.

Seeing as equity funding is the best from of funding Zimbabwe can get as we seek to rebuild the nation, the foreigner activity on the ZSE is encouraging.

We can only imagine what would happen if the Indegenisation Act which requires foreign investors to give up control of their companies in Zimbabwe is repealed. We would probably see an influx of foreign investment.