Foreign participation rises on ZSE

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FOREIGN buyers’ participation on the Zimbabwe Stock Exchange (ZSE) increased to $66 million during the first seven months of the year from $27,4 million in the previous comparable period due to renewed confidence in the economy, latest data show.
Reserve Bank of Zimbabwe governor John Mangudya said foreign investors had shown renewed interest in listed counters as confidence returns after a two year sell-off period.
“Foreign investor participation improved, as reflected by cumulative net inflows of $65,69 million, over the first seven months of 2018, compared to cumulative net outflows of $27,43 million during the same period last year. Foreign investors’ dominance on the ZSE was underpinned by renewed confidence in the country’s economic prospects,” he said in his monetary policy statement on Monday.
Foreigners have moved from a net selling position to net buyers after President Emmerson Mnangagwa’s policy of opening up the economy to foreign investors after his first inauguration in November last year.
The increase of foreign portfolio flows, from equity purchases by foreign investors, provide both liquidity and stability on the market which is positive for not only listed firms but the country at large.
However, trades are mainly concentrated on companies like Old Mutual, Econet Wireless, Delta Corportion, First Mutual Holdings, Barclays Bank, SeedCo and PPC as investor see them as being well poised for growth.
This comes as British investors are reportedly buying into ZSE counters on the back of reduced country risk.
Stockbroking firm, Morgan & Co, local unit director Lungani Nyamazama recently told The Financial Gazette that despite general sentiment foreign investors were dumping ZSE stocks, British investors had shown renewed interest in listed counters as confidence returns.
“We have seen growing interest from the British side. It has been looking up and more keep showing interest in the ZSE. This is because the Zimbabwean risk premium has reduced and we are starting to engage the foreign end and international community. In turn, this has spurred interest in foreign investors,” Nyamazama said during an interview.
Despite a foreign exchange crisis, which has seen foreign investors fail to repatriate dividends, Nyamazama said investors were looking at long-term investments and were not worried about immediate repatriation.
Zimbabwe is also expecting German firms to list on the local bourse following a recent engagement visit by Treasury officials.
Mnangagwa told delegates at the launch of Escrow Group’s online capital market trading platform, C-Trade, that Treasury had engaged several German companies who were willing to come and operate in Zimbabwe.
During the period the first eight months of the year, the ZSE, experienced growth in trading activity, resulting in a 14,32 percent increase in the AllShare Index, to 114,32 points.
“What we have done is assure investors that we are implementing a concerted anti-corruption drive and other efforts to indicate that indeed, we are open for business, so today as we witness the launch of this ground-breaking stock trading platform, we do so in full knowledge that the Zimbabwe Stock Exchange will be getting additional listings in the near future,” Mnangagwa said at the event.
During the period under review, the industrial and mining indices gained 15,38 percent and 15,16 percent, to 384,25 points and 163,99 points as at July 31 2018, respectively, from their positions in December 2017. On a year on-year basis, the industrial and mining indices grew by 89,05 percent and 136,16 points, respectively.
As a consequence of improved trading activity on the local bourse during the seven months to July 2018, the ZSE capitalisation gained by 14,51 percent, to $10,97 billion, from $9,58 billion as at December 31 2017. This represented an increase of 90,45 percent over the year.
“Over the period January to July 2018, cumulative volume of shares traded grew by 54,4 percent to 1,5 billion shares, representing an increase of 206,14 percent to $427,11 million in value,” said Mangudya.
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