Omega Ukama 
FOREIGN activity on the Zimbabwe Stock Exchange (ZSE) declined by 33 percent to $1,15 billion in May.
This was despite a 27 percent increase in overall turnover to $3,9 billion. Purchases by foreigners amounted to $332 million compared to $363 million in April, while sales declined to $816 million from $1,34 billion. Analysts say the decline in foreign selloffs put some pressure on supply of equities in May and added some steam to the market’s rally during the month.
“There is the fact we have had foreign portfolio investors exiting the market for almost a year now and their share of the floats of the listed companies is dwindling, therefore the supply-side of scrip is smaller,” equities analyst Rufaro Zengeni said on a recent webcast.
“Price is a function of supply and demand, so where the supply-side is diminishing you have to pay more to get stock,” he said.
The market gained $90,72 billion in May as the benchmark All Share Index put on 17 percent to close the month with year-to-date gains of 105 percent.
Market capitalisation grew by 15 percent to $646 billion, and the ASI closed at 5 428,28 points.
The spike came as a shock after a slowdown that started in February, which saw monthly gains shrinking from 19 percent to 3,5 percent in April amid indications and growing sentiment that the market was getting back to “normalcy”.
Foreign selloffs have accelerated on the local bourse since the Reserve Bank of Zimbabwe introduced weekly currency auctions last June, which improved access to foreign exchange. Foreign investors had previously struggled to repatriate disinvestments and dividends due to foreign currency shortages.
Capital remittances from disinvestments and dividend payments to foreign investors increased by 88 percent in 2020 to US$259 million, according to the central bank.
Meanwhile, analysts say last year’s “unceremonious”, five-week suspension of the ZSE piled on the mound of reasons for foreign capital to leave the market and the country altogether.
The government says the break allowed investigations into allegations of speculative activity, which it believes was driving inflation ― reported at more than 700 percent at the time.
newsdesk@fingaz.co.zw
