THE Zimbabwe Stock Exchange (ZSE) experienced a negative growth of 30% in real terms last month after the local currency depreciated by 34% within the same period, according to Inter Horizon Securities (IH).
The bourse, which has experienced massive migrations since last year, however, witnessed slight improvement in market cap as it grew 3,95% within the period to $3,42 trillion.
“However, the local currency experienced headwinds depreciating 34% within the month under review and as a result, performance of the bourse in real terms was diluted to a growth of -30%.
“Average daily value traded for the month of April inched up from an equivalent of US$0,48 million in March to US$0,53 million while total volumes reduced 21% to 76,54 million,” IH said in its April equity research.
At a current market cap of US$1,9 billion, researchers said the ZSE is still trading at a discount to the long-term average of US$4 billion.
“As such, the ZSE offers upside, trading at a deep discount to fair value despite fundamental growth in businesses over the past three years and themes of increasing corporate transactions.
“We are of the view that we will continue to see strong correlation between money supply and ZSE stock market performance. The uncertainty around money supply developments in 2023 propels us to lean more towards defensive stocks that have strong dividend policies in case capital gains remain subdued.”
The advisory firm noted that the exchange continues to benefit from the pipeline of new entrants, the latest being African Sun having finalised its movement across from the ZSE to Victoria Falls Stock Exchange (VFEX) on April 14.
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At listing, this added US$127,69 million to market capitalisation signifying a growing bourse.
Market cap within the month decreased an aggregate 2,44% to US$1 billion despite the addition of hospitality heavy weight African Sun with only four of the 10 listings traded in the green within the month, IH noted.
Padenga was the top gainer in April increasing 21% month-on-month followed by Seed Co International which gained 11% within the period.
Overall performance was weighed down by heavy weight Innscor, which saw a 17% decline in the period whilst Bindura Nickel Corporation was the worst performer losing 36% of value in April. Average daily traded for the exchange in April registered at US$94,912 versus the US$35,673 recorded in March.
Confirmed listings in the current month for the VFEX include WestProp and First Capital Bank, thereby diversifying sectorial offerings.
On a one-year rolling basis, IH said the VFEX All Share Index has outperformed its peer and has provided the better store of value within the period.
