Analysts say the local bourse has been one of the best performing stock exchanges worldwide, driven by a strong foreign interest, as local participation is constrained by liquidity challenges.
However, according to the Ministry of Finance, turnover on the local bourse declined by 36,5 percent in April, to $23.1 million “due to reduced foreign investor participation, as well as the toll of the prevailing liquidity constraints”.
This was reflected in volumes traded on the bourse which declined by 36,9 percent, while average daily turnover stood at $1,15 million. Analyst John Robertson said this was as a result of declining confidence in Zimbabwe emanating from policy changes and inconsistencies.
“There is a lack of consistency on policy positions. On indigenization investors are aware that changing ownership of existing shares does not put money at the disposal of companies to reinvest in important elements such as new technologies. Foreign investors fear they could lose their investments in this policy environment,” Robertson said.
Takunda Mugaga, another analyst said foreign traders would still continue to be a strong component of the local stock exchange and without them there would certainly be no equities market to talk about in Zimbabwe.
“Foreign investors are not necessarily declining on ZSE but there is a fluctuation which had seen their volume of trades recently dwindling. The foreign component will continue setting the pace of trade on ZSE going forward but a wait and see attitude will strengthen as the call for election strengthens,” Mugaga said.
The industrial index increased by 3,1 percent from 183,88 points in March, to 189,67 points as at 30 April 2013. Similarly, the mining index gained 8.7 percent from 66.21 points, to 71.98 points during the same period.
The finance ministry revealed that overall, the total market capitalisation of the ZSE increased by 3,6 percent from $4.72 billion as at 1 April, to $4.89 billion on 30 April.
Post published in: Business