Omega Ukama 
INSTITUTIONAL investors, including the National Social Security Authority (NSSA) have taken an active role on the Zimbabwe Stock Exchange (ZSE), which has breached the $100 billion capitalisation mark — for the first time — as investors seek to hedge against inflationary pressures.
As of March, official year-on-year inflation stood at 676 percent but independent observers suggest the figure could be higher than what is reported.
The local bourse put on almost $50 billion in less than two weeks to close trade on Wednesday at $134 billion after a somewhat subdued performance during the early days of the lock-down which was put in place to curb the further spread of Covid-19.
“The current hyped activity is largely attributed to inflationary and exchange rate developments which have sparked demand for equities. We have seen uncertainty and monetary developments which strongly point to both inflationary and sustained currency risk,” Mutandani Makuyana, Invictus Securities Zimbabwe’s head of research told The Financial Gazette this week adding that “speculative positions have also prompted steep demand against limited selling,” which he said has seen buyers chasing prices to the current record highs.
“The ZSE has, however, registered impressive returns and has so far outperformed other alternative investment vehicles,” he said.
According to sources, NSSA recently pumped in excess of $100 million on the equities market after a two-year hiatus, with a view of enhancing pensioner earnings.
While the state-run pension fund has always been a dominant player on the ZSE owing to its significant stakes and portfolio on the local bourse, the moratorium had been imposed by ex-Labour minister Petronella Kagonye and only lifted under Sekai Nzenza and Paul Mavhima.
As of March, official year-on-year inflation stood at 676 percent but independent observers suggest the figure could be higher than what is reported.
Enock Rukarwa, a local equities analyst said the market rally could be a result of the recent announcement of a $18 billion stimulus package, parallel market developments and the introduction of new notes and coins.
“The stimulus package is an expansionary monetary policy with direct positive impact on broad money supply as well as swelling inflationary pressures ultimately leading to rational investors going long on stock market positions,” he said.
“Directional causality from parallel market events to stock market volatility continue to lead the pack in almost all rallies including the current one.
“The introduction of new notes and coins also stimulates hedge sentiments leading to exploitation of stock market opportunities.
“Lastly the herding effect phenomena cannot be underestimated given the breadth and depth of our financial markets,” Rukarwa said.
As analysts had predicted that the covid-19 pandemic would have a minimal impact on the ZSE, which remains insulated from global financial developments, pension funds such as the NSSA have returned to the market by pumping in $100 milllion-plus .
Over the past decade performance of the market has proven to be directly tied to currency and monetary dynamics in the local economy with little regard to the fundamentals of the respective counters or international trends.
Beverages manufacturer Delta Corporation, which is the largest listing by capitalisation at $18,8 billion, closed Wednesday at $14,8 per share.
Econet Wireless ranks second with capitalization of $16,32 billion trading at $6,30.
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