eBusiness Weekly
Kudzanai Sharara
The Zimbabwe Stock Exchange seems to be the only African stock market where bears have set in, with the bulk of the other equity markets currently trading in the positive territory.
Last year most African stock markets recorded strong gains with the ZSE leading after closing the year 2017 with a 130,42 percent gain.
Performance on the Nairobi Stock Exchange was solid with the All-Share Index, adding 28,20 percent in a year that saw political squabbles between president Uhuru Kenyatta and his long-time rival Raila Odinga.
The Nigeria Stock Exchange also performed quite strongly adding 24,51 percent as did the JSE All-Share Index which added 30,37 percent in US dollar terms.
While most of the continent’s stock markets have continued from where they left last year, the ZSE has been on a downward spiral since the beginning of the year with analysts calling it a market correction.
A correction in a market’s value following an upswing is indicative of a market’s true market value and may not indicate a loss in value so much as a market’s return to stability.
Popular sentiment is that the ZSE is falling because it is coming from high levels attained in 2017 which were not supported by company fundamentals, but a result of hedging from currency weaknesses.
Some, however, believe the fall has gone beyond market correction as the main Industrials Index has dropped more than 10 percent from its peak of 534,13 attained on November 14, 2017. Since then, the ZSE has lost 80,95 percent.
Some analysts still consider some stocks on the ZSE as overvalued in relative comparison to regional and emerging market stocks.
As of Friday last week, the ZSE had shed 10,77 percent since the beginning of the year, the biggest drop among all African markets.
The closest to the ZSE is the Dar es Salaam Stock Exchange, which had lost 2,51 percent by close of trading on Friday last week.
Ghana’s GSE-CI is currently the year’s top performer having rallied 30,93 percent so far in the year. Managing Director of the Ghana Stock Exchange Kofi Yamoah recently said, the market’s sterling performance, was due to improved economic fundamentals with a rapid decline in inflation, Treasury Bill rates, a relatively stable cedi and investor confidence in Ghana.
The west African country is expected to expand by 8,3 percent this year, the fastest growth rate on the continent, according to World Bank projections. This is on the back of increased oil output and stronger credit growth.
Other top performing markets so far in the year, include the Namibian Stock Exchange which has so far added 16,63 percent, the Nigeria Stock Exchange up 11,19 percent and Mauritius up 8,53 percent.
Markets in neighbouring countries are also performing with the Lusaka Stock Exchange in Zambia and the Malawi Stock Exchange currently trading 5,71 percent and 5,1 percent firmer respectively.
The Botswana Stock Exchange is also up 2,01 percent in US dollar terms but down 1,65 percent in local currency.
