Source: Local stocks gain 12pc | Herald (Business)
Enacy Mapakame Business Reporter
Stocks on the local bourse amassed 12 percent gains week-on-week amid a global markets crash on the back of the pandemic coronavirus (COVID-19), as it reversed losses recorded in the past three weeks.
Top global markets have been on a free-fall with billions of dollars lost as the COVID-19, first detected in Wuhan, China in December continues to spread across the world, with the region now recording confirmed cases of the virus. The cryptocurrency markets have not been spared neither.
Last week, total market value increased by $7 billion or 12 percent to settle at $67 billion. The ZSE All share Index put on 12,35 percent and closed at 522,2 points bringing its year-to-date return to 126 percent.
Gains in the market’s heavy capitalised stocks and mid-tiers led the rally which saw the ZSE Top Ten Index rising by 14,17 percent to close pegged at 445,76 points. Market watchers contend the rally was in line with the exchange rate volatility which has seen the rate reach as much as $42 for the greenback on the illegal parallel market, which has increased liquidity on the market.
The rally is, however, expected to halt following announcements by Treasury to suspend fungibility of Old Mutual, PPC and Seed Co International that are also listed on other exchanges.
PPC is listed on the JSE while Seed Co International is present on the Botswana Stock Exchange and Old Mutual is on the JSE as well as the London Stock Exchange.
“The subsequent gains were therefore in line with our predictions.
While further rally is expected, we see the move to suspend fungibility in dual listed counters as having a direct impact on ZSE performance. OM is a weighty counter and the impact of a sell-off will likely drag the market.
“Beyond these temporary shocks we see the market continuing to re-price in line with inflation and exchange rate developments. The adverse movement in exchange rate cheapens ZSE stocks given that underlying business will be re-pricing their products and thus realising higher revenues in ZWL terms. This has consequent effect on valuation matrices,” said analysts at Axity Axis.
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