Turnover on the Zimbabwe Stock Exchange for the five months to May fell 40 percent to $122 million compared to the same period last year, official figures have shown, with analysts attributing the poor performance to weakening stock prices and anaemic economic fundamentals.
Despite registering strong growth in the number of shares that exchanged hands, turnover for the period stood at $122 210 806.68 from$205 918 163.68, reflecting bearish sentiment on the local bourse.
The number of stocks that traded stood higher at 1 464 842 169 from 1 351 997 636 shares. Total market capitalization stood at $3.9 billion as at May from $4.5 billion during the same period last year.
Analysts attributed the poor performance of the equities market to structural issues confronting the economy.
“The important statistic is turnover. This means that the economy is depressed,” said an analyst at MMC Capital.
“This is consistent with the general performance of companies that have released results so far. If you look at how big companies such as OK Zimbabwe, Econet and Delta have performed, one can see that spending has declined. We are seeing less revenues coming into companies and costs are stubborn and they remain intact and therefore earnings are depressed.”
Investors have been targeting companies with viable business models and strong shareholder support. About 15 firms have been deregistered from the ZSE since 2012.
Three of the firms delisted through schemes of arrangement while the other three voluntarily left the ZSE.
Government has toned down its rhetoric on the indigenization and empowerment regulations compelling foreign firms to dispose of at least 51 percent stakes to locals in a bid to whet the appetite of investors.
It introduced new measures which would address the empowerment issues on a sector by sector basis as opposed to initial blanket approach but are yet to stimulate activity on the local bourse as well as attract more foreign direct investments.-The Source