HARARE: The Zimbabwe Stock Exchange market capitalization declined for the ninth consecutive month, shedding 9,38 percent to $3,66 billion in November, reflecting the chronic challenges besetting virtually all sectors of the domestic economy. Year to date, the ZSE market capitalisation has lost 31,29 percent, as the weak economic fundamentals have continued to weaken negative sentiment.
The ZSE Industrials Index fell 10,15 percent month on month on weakness in heavyweights Innscor, Delta, Econet and SeedCo. The Minings Index fell 5,26 percent on the back of 13,33 percent decline in RioZim during November.
Year to date, the main index has come off 27,79 percent compared to losses of 20,9 percent in Nigeria, 12,1 percent in Kenya 0,17 in Mauritius and 17,2 percent and 4,08 percent gains for Botswana and South Africa, respectively.
Activity on the domestic bourse remained depressed in November, as turnover dropped 35,42 percent to $8,32 million, with average daily trades for the month coming in at $396 000.
Mobile network operator Econet, newly listed fast-foods retailer Simbisa and beverages giant Delta contributed 21 percent, 14 percent and 12 percent of the volumes, respectively, which rose 45,54 percent to 95,38 million shares.
The biggest gains in the individual stocks values, during the period under review were recorded in horticultural produce firm Ariston, 104 percent to 0,47c, engineering firm Zeco 100 percent to 0,02c, hospitality group RTG 48,15 percent to 1,20c, furniture retailer Pelhams 33,33 percent to 0,04c and construction group Masimba 31,31 percent to 1,30c.
The most significant losses during the month of November were registered in Innscor down 43,76 percent to 34c, Zimpapers 37,5 percent weaker to 0,50c, Econet 32,71 lower at 18c, as OK Zimbabwe and Starafrica shed 20 percent each to close the month at 4,80c and 0,80 respectively.
According to economic analysts, the economic environment, characterised by falling commodity prices, continues to impact on financial performance of companies, as reflected in the financials of Hippo, BNC, OK and Delta.
The domestic economy is being dogged by a number of factors including high cost of labour, lack and high cost of inputs, lack of affordable low cost funding, poor infrastructure and antiquated equipment and technology, which have affected competitiveness and ultimately viability. Viability challenges facing companies in all sectors of the economy have also affected the firms’ capacity to pay living wages, which affects aggregate demand due to low wages.
Liquidity challenges in the domestic economy remain the single biggest constraints to efforts aimed at addressing other issues slowing progress towards successful economic turnaround.
This is because challenges besetting industry, which limit exports, scrapping of the local currency due to high inflation in 2008, low direct and portfolio investment, negligible foreign aid and external lines of credit left Zimbabwe ill placed to ensure enough liquidity to drive the economy.
