ZSE ranked best African market

ZSE ranked best African market
Published: 18 October 2018 (182 Views)
THE Zimbabwe Stock Exchange (ZSE) has been ranked as the best performing market in Africa in the last five years.

The local bourse has intermittently surged on the deterioration of economic fundamentals in the country, resulting in most investors preferring stocks to hedge against cash shortages and rising inflation.

According to InvestingInAfrica, the ZSE's return over the past five years, as of September 30, 2018, was 98,5 percent, topping 14 other markets on the continent.

The Namibian Stock Exchange was the second best performing market with a return of 38,5 percent while the Nigerian Stock Exchange, with a loss of 60,1 percent was the worst performing market on the continent over the period under review.

The performance of a stock market under normal circumstances is driven by expectations regarding company performance, which in turn tends to be related to the projected economic progression.

Zimbabwe's economy significantly slowed down in the last five years, but the market enjoyed a bull-run, which turned dramatic in 2017 when market capitalisation breached the psychological $15 billion mark for the first time since its inception in 1896.

"On a purely intrinsic value basis the shares prices were supposed to be declining as the economy and businesses underperformed but other factors also kicked in," Ranganayi Makwata, a local equities analyst said recently in an interview with The Financial Gazette.

"The stock market became a safe haven for investors and other economic players when the local currency, which many are calling RTGS dollars, began to lose value at a faster pace against the real US dollars. The ‘flight to safety' which ensued pushed share prices beyond intrinsic values in RTGS dollars terms," he said.

At the centre of the country's challenges, is the unsustainable high budget deficit. The financing of which has mainly been through domestic borrowing with the use of instruments such as Treasury bills, overdraft with the central bank, cash advances , arrears and loans from the private sector.

Experts say such financing mechanisms result in increased money supply in the economy translating into exchange rate misalignment and inflationary pressures.

"What worsened the situation was the massive growth in money creation by government, with the excess liquidity finding its way onto the stock market while some of it went into buying foreign currency for value preservation purposes pushing the prices of both assets even higher.

"So the bullrun was not being driven by perceived improvement in business fundamentals but by fear of losing value to inflation and currency depreciation," said Makwata.

In yet another crisis fueled bull-run, the ZSE last week reached a record $23 billion as ‘RTGS dollars' discount in the informal market breached extraterrestrial levels of 400 percent.

This latest surge, however, is not accounted for in InvestingInAfrica's calculations which were for the five years ending September 30, 2018.

- The Financial Gazette

Tags: ZSE, Exchange, Best,

You May Like These Videos


There are no comments.

Latest stories

'Mnangagwa to be removed in a painful way'

by Mandla Ndlovu | 20 April 2019 | 120 Views

WATCH: Chiwenga attacks Mnangagwa and Masiyiwa

by Mandla Ndlovu | 20 April 2019 | 108 Views

Mnangagwa must act on economic decay

by Concerned Citizen | 20 April 2019 | 94 Views

The Gukurahundi hearings

by Clemen Moyo (Mr) | 20 April 2019 | 61 Views

Chamisa is Ndebele Closest Saviour, Dear Thulani

by Multiverse Dungani | 20 April 2019 | 86 Views

'I prefer to be led by MDC' says Mliswa

by Mandla Ndlovu | 20 April 2019 | 119 Views

LIVE: Temba Mliswa holds his own Independence celebration

by Mandla Ndlovu | 20 April 2019 | 83 Views

Top Pastor blasts Jonathan Moyo

by Mandla Ndlovu | 20 April 2019 | 100 Views

Sydney Malunga's son speaks on the economic crisis

by Mandla Ndlovu | 20 April 2019 | 88 Views

HIV used to cure babies in America

by Mandla Ndlovu | 20 April 2019 | 98 Views

Why Zambezi Water Project will never be achieved

by Mandla Ndlovu | 20 April 2019 | 72 Views

Disgraced Australian journalist arrested in Zimbabwe

by Staff reporter | 20 April 2019 | 81 Views

We're not Gukurahundi activists, says Mthwakazi

by Staff reporter | 20 April 2019 | 64 Views

Woman wants maintenance until she remarries or dies

by Staff reporter | 20 April 2019 | 72 Views

Man petitions police to release car held as exhibit

by Staff reporter | 20 April 2019 | 70 Views

Cyclone Idai buried people with their belongings

by Staff reporter | 20 April 2019 | 78 Views

Rift widens in MDC Masvingo

by Staff reporter | 20 April 2019 | 66 Views

Chamisa reaches out to Mnangagwa

by Staff reporter | 20 April 2019 | 75 Views

Mnangagwa's advisors turn against Trevor Ncube

by Mandla Ndlovu | 20 April 2019 | 134 Views

MDC Structures keep the dream alive, the Jewel of Africa returns

by Jacob Mafume | 20 April 2019 | 108 Views

Mnangagwa wedged between a rock and hard place

by Editorial - Daily News | 20 April 2019 | 109 Views

Chamisa demands face to face meeting with Mnangagwa

by Staff reporter | 20 April 2019 | 115 Views

PHOTOS: Bulawayo - Nkayi road construction

by Social media | 20 April 2019 | 97 Views

Credible team and sound advice ahead of Elective Congress

by A big Easter by Tinashe Eric Muzamhindo | 20 April 2019 | 87 Views

South Africa and Zimbabwe turn a blind eye

by Sipho Ndlovu | 20 April 2019 | 90 Views

If its about us let us know

by Thomas Murisa | 20 April 2019 | 74 Views

ZAA Canada announces inaugural nominees

by Staff reporter | 20 April 2019 | 82 Views

Mnangagwa scared of death via political foul play

by Itai Mushekwe | 20 April 2019 | 93 Views

VACANCY: Thomson Reuters Foundation is employing

by Mandla Ndlovu | 19 April 2019 | 171 Views

Mohadi goes to court, seeks protection against ex-wife

by Staff reporter | 19 April 2019 | 223 Views

Gukurahundi cannot be wished away: Williams

by Staff reporter | 19 April 2019 | 171 Views