ZSE ranked best African market

ZSE ranked best African market
Published: 18 October 2018 (106 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,
 0

You May Like These Videos

Comments

There are no comments.

Latest stories

Knox Mutizwa wins August Goal of the Month award

by kickoff | 05 November 2018 | 1032 Views

BREAKING: Gandawa on the run

by Staff reporter | 05 November 2018 | 1981 Views

Econet cannot distribute Kwese TV content to Zimbabwean viewers

by Staff reporter | 05 November 2018 | 1513 Views

Shoot-out robbers arrested

by Staff reporter | 05 November 2018 | 1525 Views

Mnangagwa ally warns economic saboteurs

by Staff reporter | 05 November 2018 | 1476 Views

Chamisa mobilises supporters for mass protests

by Staff reporter | 05 November 2018 | 1260 Views

LISTEN: Acie Lumumba speaks on how he got paid

by Staff Reporter | 05 November 2018 | 1042 Views

Dzamara speak on Zanu-PF fights

by Mandla Ndlovu | 05 November 2018 | 1009 Views

Minister Raj Modi Modi donates salary

by Mandla Ndlovu | 05 November 2018 | 861 Views

'I am a Trillionaire' Magaya says

by Mandla Ndlovu | 05 November 2018 | 1380 Views

Supermarkets to be blacklisted over cooking oil

by Mandla Ndlovu | 05 November 2018 | 825 Views

UK army to recruit from Commonwealth

by BBC | 05 November 2018 | 920 Views

Magaya opens up on arrest

by Mandla Ndlovu | 05 November 2018 | 928 Views

Kambarami is still 'Deputy Mayor'

by Mandla Ndlovu | 05 November 2018 | 770 Views

'Import ban must not go beyond December 21'

by Staff reporter | 05 November 2018 | 851 Views

Prophet Magaya puts fresh spin to arrest

by Staff reporter | 05 November 2018 | 880 Views

Chamisa's sign language interpreters get thumps up

by Staff reporter | 05 November 2018 | 865 Views

Mnangagwa to review Mthuli Ncube's 2% tax again

by Staff reporter | 05 November 2018 | 831 Views

Lumumba to be probed by ZAAC?

by Staff reporter | 05 November 2018 | 607 Views

Dzamara speak on ZANU PF fights

by Mandla Ndlovu | 05 November 2018 | 575 Views

Zimbabwe as a new gateway into Africa

by Minister of Finance Prof Mthuli Ncube | 05 November 2018 | 848 Views

Chiwenga's ex-wife looted millions

by Mandla Ndlovu | 05 November 2018 | 1232 Views

We are our own worst enemies

by Mapozho Saruchera | 05 November 2018 | 894 Views

Mnangagwa to deal with unexplained wealth and bank deposits

by Staff reporter | 05 November 2018 | 811 Views

WATCH: Chiwenga talks about Prophet Walter Magaya's lipstick

by Staff reporter | 05 November 2018 | 803 Views

Lumumba Saga takes new twist....War vets bay for Mutsvangwa's blood

by Mandla Ndlovu | 05 November 2018 | 870 Views

Chamisa demands Presidency

by Mandla Ndlovu | 05 November 2018 | 759 Views

Zimbabwean teachers miss out on New Zealand opportunity

by Staff Writer | 05 November 2018 | 705 Views

Zimbabwe to introduce e-provisional driver's exams

by Staff reporter | 05 November 2018 | 751 Views

Zimbabwe to supply water to South Africa

by Staff reporter | 05 November 2018 | 749 Views

Mnangagwa claims that 'good times will soon roll'

by Staff reporter | 05 November 2018 | 714 Views

Zimbabwe as a new gateway into Africa

by Hon. Prof Mthuli Ncube | 05 November 2018 | 844 Views

Chiyangwa appoint Karikoga Kaseke

by Staff reporter | 05 November 2018 | 716 Views

ZCTU demo: Ruling today

by Staff reporter | 05 November 2018 | 666 Views

Missing cop found dead

by Staff reporter | 05 November 2018 | 810 Views

Tagwirei marries long-time girlfriend

by Staff reporter | 05 November 2018 | 1261 Views

Zimbabwe relaxes maternity leave entitlement

by Staff reporter | 05 November 2018 | 775 Views

Zimbabwe to receive drugs, ambulances from India

by Staff reporter | 05 November 2018 | 698 Views