ZSE All Share Index Surges in Q3 as Investors ...

ZSE All Share Index Surges in Q3 as Investors Seek Haven Amid Currency Volatility

Audrey Galawu

Assistant Editor

The Zimbabwe Stock Exchange All Share Index soared by a remarkable 89.22% in the third quarter of 2024, closing at 243.41 points on September 30. This dramatic rise highlights increased investor activity as the stock market became a preferred safe haven amidst currency volatility and the widening parallel market exchange rate premium.

The surge in the ZSE’s performance also drove a sharp increase in turnover for the quarter, reaching ZiG736 million, equivalent to US$44.47 million.

This represents a 297% increase in USD terms compared to the previous quarter, underlining a shift in investor preferences towards equities. According to the Securities and Exchange Commission of Zimbabwe, the strong growth is indicative of heightened market confidence.

“The significant rise in the ZSE All Share Index and corresponding turnover reflects how investors are responding to the liquidity dynamics in the economy,” SECZim commented in its Capital Markets Overview report.

While the ZSE enjoyed robust performance, the Victoria Falls Stock Exchange posted a more modest 2.86% growth, closing the quarter at 105.63 points. However, VFEX turnover dropped by 23% to US$7.79 million, attributed to limited USD liquidity for investment.

The overall market capitalisation grew by 5.3%, increasing from USD4.09 billion in June 2024 to USD4.31 billion by the end of September. This brought the year-to-date return to 8.1%, further solidifying the capital market’s role as a critical economic driver.

The quarter also saw the listing of Invictus Energy Limited on the VFEX, bringing the total number of listed instruments on the exchange to 16. This underscores VFEX’s growing attractiveness to companies seeking USD-denominated investments despite the decline in turnover.

Asset Management Sector Performance

The asset management sector mirrored the bullish stock market trends. Total Funds Under Management nearly doubled to ZWG$92.84 billion, a 99.64% increase from the previous quarter, with USD-denominated FUM accounting for US$1.76 billion.

The sector’s exposure to equities increased from 37.21% in Q2 to 40.53% in Q3, bolstered by rising stock prices. Property investments remained the largest allocation at 43.64%, though slightly down from 45.91% in the previous quarter.

The securities dealing sector demonstrated notable improvement, with 19 out of 21 firms reporting positive earnings for the quarter, compared to only 10 in Q2. SECZim noted that while 14 firms still struggled to break even from brokerage income alone, the overall earnings improvement marked a turning point for the industry.

“The performance of securities dealing firms has shown resilience despite challenges, reflecting the strength of Zimbabwe’s capital markets,” the Commission stated.