eBusiness Weekly
Mamvura’s Market Minute
Following the events of this week, we should once again beware of the sacred month of Mbudzi. Many major calamities, which have resulted in a sharp correction on the Zimbabwe Stock Exchange, have happened during this month.
Over the past week to Wednesday, the ZSE has fallen a cumulative 37,5 percent, and is so often the case, the largest fall (-11,32 percent) came on Friday (November 17), a few days after “the event”.
As a result of the introduction of circuit breakers, we will never see a fall of more than 20 percent, and tales of the past are now just historical footprints. However, the watershed events over the past 10 days happened 20 years to the anniversary of Black Friday. Coincidence or Mbudzi?
In 1997, after the 70 percent crash of the Z$, the Industrials took a few days to react and its sharpest loss in points — as the focus was back then — was 559,51, a fall of 5,78 percent, and in reality, not very much.
The largest percentage drop was the after the ZSE hit “non-tradeability” in 2008, when the Industrials plunged 38,57 percent on November 18.
Other major falls on the Industrials have been the 17,89 percent on July 5, 2007 amid nationalisation fears during the “Dzikisa Mutengo” campaign, 12,47 percent on August 5, 2013 following the “shock” defeat of MDC-T in the elections, and 9,39 percent on Decembers 19, 2004 after interest rates went up sharply in the wake of Gideon Gono’s assumption of the governor’s chair.
One thing is for certain, if the right economic course is followed in the months ahead, it will be years before we get back to the 534,13 record close achieved on November 14, the 20th anniversary of Black Friday.
How shall we one day explain the “record” level achieved during Mbudzi 2017?
It’s rather amusing how the headlines over the past week have spoken of $5 billion being wiped off market cap, coming in the wake of Professor Steve Hanke’s claims of “hyperinflation” based on the OMIR, when the market cap over the past week has actually risen in OMIR terms!
How will Prof Hanke explain himself? A more accurate headline might read “$5 billion of speculative liquidity not realised”.
