ZSE return on investment declines

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THE Zimbabwe Stock Exchange’s (ZSE) main industrial index gathered a return of 46,28 percent last year, way lower compared to 130,42 percent in 2017, financial service company Old Mutual has said.
In its portfolio manager’s report for the fourth quarter of last year, Old Mutual Securities (OMSEC) said the equity market experienced significant volatility in the latter part of 2018, a development that lowered investor returns.
“This was due to the market’s response to currency stability concerns following monetary and fiscal statement announcements in the last quarter of 2018,” OMSEC said.
At its peak, the industrial index was 110,2 percent up on a year-to-date basis on October 11 2018 and reached its lowest point on March 15 2018 when it dropped to 288,35 points.
“The mining index registered a return of 59,89 percent for the year. This was mainly attributed to share price returns from Bindura Nickel Corporation and Rio Zim. The remaining two listed mining companies, Hwange Colliery Company Limited (HCCL) and Falcon Gold (Falgold), faired less pleasantly,” said OMSEC.
During the period under review, HCCL was placed under administration and suspended from trading whilst Falgold published a notice indicating significant operational constraints that were impeding operations.
Despite operating desirably for the greater part of the year, most ZSE listed companies have been confronted with acute foreign currency shortages throughout the year coupled with significant inflationary pressures towards the end of the year. OMSEC said these macro-economic challenges have negatively impacted the performance of companies and unless immediately addressed the trend was likely to persist in 2019.
“The total value of shares that traded on the ZSE in 2018 was $926,3 million, a 33,3 percent upswing from 2017. It should be noted that foreign investors were net buyers of $54,7 million worth of equities on the ZSE and accounted for 31 percent of all trades,” said OMSEC.
In 2017 foreign investors accounted for 30 percent of all trades and were net sellers of $100,9 million worth of shares.
Macro-economic indicators destabilised in the last quarter of 2018 notwithstanding the output peaks that were achieved in certain segments of the economy.
The destabilisation arose from acute shortages in foreign currency and inflation which, in both cases, became increasingly pronounced in the final quarter of the year.
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