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BizDay Zimbabwe

Foreign investors dominate bourse

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Foreign investor activity on the Zimbabwe Stock Exchange increased in the first four months of the year with over a billion shares changing hands despite the total market value taking a knock. According to latest statistics from ZSE 1,1 billion shares valued at $170 million were traded between January and April this year.

Transactions completed during the first four months of this year compare favourably to last year when turnover came in at about $144 million while volumes traded were under a billion, at 717,7 million.

Foreign shareholders accounted for a total of 437 million of shares bought, 283,7 million of the shares sold and $111,5 million of turnover from buyers and $74,5 million of sellers turnover.

The latest statistics from the ZSE show that a total of 316 million shares were bought by foreign shareholders with the same investors selling about 217 million shares in the same period last year.

While the ZSE market capitalisation opened the year at $4,7 billion, it had declined to about $4,5 billion by end of last month.
The decline in the total value of shares traded on the bourse has also reflected in the continuous gradual drop in the industrial index, which opened the year at 189.25 points but closed April at 172.91 points.

Likewise, the southward trend also characterised shares of listed mining companies with the mining index dropping from its year opening levels of 35.04 points to end the first four months at 29.64 points.

Foreign investors continue to dominate trading on the local bourse as locals are largely constrained by the liquidity crunch pervading the entire economy since dollarisation of the economy in 2009.

Analysts said the level of investor activity on the bourse shows the appetite of foreign investors for Zimbabwean stocks despite the tight liquidity that is constraining the profitability of companies.

Most foreign investor interest has tended to fall on bellwether stocks such as Econet Wireless, Delta Corporation and Innscor, which have somehow found a way to make profit despite the challenges.

They also said that while investors are generally risk averse, most of them strong believe in potential lucrative returns when the economy recovers, taking advantage of current discounted prices.

Zimbabwe is facing serious liquidity crunch after dropping its currency due to hyperinflation, which reached a crescendo in 2009 and adopting a basket of currencies dominated by the greenback.

Through Zim-Asset, the Government is working on a cocktail of measures to improve liquidity and the economic environment in should drive productivity and recovery in the medium to long term. Business Herald

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