Harare - The Zimbabwe Stock Exchange (ZSE) weakened further last month as investors fled, spooked by cash shortages in the country, after turnover for the month declined by a massive 49 percent to $7 million (R101m). Zimbabwe is struggling for liquidity and this has taken a toll on its economy, which is expected to further decline this year.
Investments have also taken a knock, with trade revenue on the ZSE hitting its weakest in the past seven years last month.
The cash crunch also hit tourism, one of a few growth areas alongside mining and telecoms, with tour operators saying tourists were worried about failure to access cash in the country.
The local stock market took a hard hit with traders saying despite assurances by the central bank last week that remittances of dividends were top priority, there was still apprehension.
Other sources added that this was affecting trade deals on the local equities market.
“The stock market has been struggling and we believe that foreign investors are still worried about the cash shortages and remittance restrictions by the central bank. Some have complained of delays in remittances,” said one trader on the ZSE.
While the ZSE turnover tumbled, market capitalisation rose marginally by 0.36 percent to close at a total market capitalisation of $2.86 billion.
IH Securities analysts said they “expect mixed trading” in counters such as Old Mutual Zimbabwe, Innscor and others, while “there is still some weakness in heavyweights” on the market.
“However, others such as Econet and Delta have shown some resilience.”
The mining index gained 2.33 percent to 26.32 points, sustained by a 7.14 percent gain in Bindura Nickel, but Falcon Gold, which has put up some of its assets for sale citing difficult operating conditions, took a 9.09 percent hammering.
Barclays Zimbabwe, the local unit of the international lender that is scaling down its investments in Africa, also saw its stock rise 20 percent, while crocodile farmer Padenga Holdings was up by 11.7 percent on stronger fundamentals in its industry.
But the gains were offset by losses in National Tyre Services, down 29.41 percent; hotelier African Sun, which declined 19.33 percent; as well as Willdale, down 11.76 percent; and dairy concern, Dairibord Holdings, which tumbled by 10 percent.
“We expect the market to remain subdued in line with general economic performance and reflecting negative confidence in the country’s economy.
“Issues such as policy frameworks and the introduction of a local bond currency will continue to weigh down prospects,” a financial expert said.
Authorities are pushing mining companies to list on its stock market through a new mining legislation that is now being finalised.
Mining companies, among them units of Impala Platinum, Anglo Platinum, Sibanye Gold and Metallon Gold, are already required to give shares into the hands of employees and communities, in addition to retaining 75 percent of their earnings inside the country.
Zimplats, which also has a listing in Australia and is one of the biggest corporates in Zimbabwe, posted a $7m profit for the year to June at a time when other Zimbabwean companies were struggling amid losses and massive profit declines.
The company said last week that it was open to complying with any requirements on listing in Zimbabwe.
BUSINESS REPORT