Published: 10 June 2013

THE Zimbabwe Stock Exchange (ZSE)'s top five capitalised counters account for over 60 percent of the bourse's US$4,7 billion market capitalisation, new equities market statistics indicated last week.

The value of the five translates to US$3 billion.

The ZSE has a total of 73 companies, including mining stocks trading under the mining index.

The remaining 67 companies account for only 37 percent of the ZSE market capitalisation, or about US$1,7 billion.

Blue-chip beverages manufacturer, Delta, the largest capitalised counter, has the lion's share of the bourse's market capitalisation at US$1,4 billion or 31,4 percent, data compiled by researchers at Southern Trust Securities (STS) during the week to March 22 2013 indicated.

Immaterial changes have taken place on the ZSE since then.

Delta's market capitalisation dwarfed the combined value of counters like banking group ABC Holdings, spirits producer African Distillers, and insurance firm Afre Corporation Limited, African Sun Limited, Apex Corporation, Art Corporation, Border Timbers Limited, Celsys, CAFCA and many others.

Mobile phone operator, Econet Wireless, conglomerate Innscor Africa Limited, sugar producer, Hippo Valley Limited and OK Zimbabwe Limited, the country's largest retail chain, made the ZSE's top five capitalised counters.

They together made up 62,97 percent of ZSE's market capitalisation during the period.

The liquidity crisis haunting the market has resulted in subdued participation of local investors on the ZSE, leaving activity to be highly concentrated on a few counters that have foreign shareholders, or have attracted offshore interest.

Econometer Global Capital head of research, Takunda Mugaga, said counters attractive to foreign investors had continued to shine because cash-strapped locals were unable to participate on the ZSE.

"If you look at the majority of those counters, they have foreign shareholders," Mugaga said.

"This report means there is no economy to talk  about anymore. It means there is no money on the market - the liquidity crisis is well documented," said Mugaga.

"OK has one advantage, it is the only company on the ZSE without competitors. Any investor wishing to invest in the retail sector therefore directs their funds to OK, Hippo largely has foreign control," noted Mugaga.

Econet, which has been bolstered by a robust network expansion with over eight million subscribers and its cash-spinning mobile transaction platform, Ecocash, had 13,3 percent of the total market capitalisation during the period, with a value of US$634 million.

Innscor's share of the market capitalisation was 9,4 percent, with a US$448 million value, followed by Hippo, and OK which had 4,8 and 3,9 percent share of the total market capitalisation respectively during the period.

In the past 12 months, foreign investor participation on the ZSE has continued to improve, although this was only concentrated on few counters.

The trend on the ZSE, in a way, mirrors the general sentiment on Zimbabwe where a few multinationals have attracted crucial lines of credit.

The ZSE lifted foreign trades by 12 percentage points to 47 percent in 2012, from 35 percent in 2009.

Equities market analysts expect the trend to continue, riding on the lack of domestic liquidity and increasing foreign interest as offshore attraction rises ahead of elections expected in the second half of 2013.

The liquidity crisis, uncertainties coming out of government's controversial empowerment programmes and investor apprehension ahead of the polls have seen the ZSE failing to register new listings in three years.

"This is surprising especially given the significant growth in the mining sector," said advisory firm Invictus Securities.

"We expect this trend to be reversed in post elections as the new government seeks to encourage new listings in an effort to encourage greater distribution of wealth and equity participation. The mining sector has grown significantly (average growth of 24 percent) over the last three years and now accounts for over 16 percent of Gross Domestic Product. There is clearly a disconnect between the strong performance of the mining sector and the poor performance of the mining index. We encourage more private mining companies to consider listing on the ZSE to ensure broader participation by local investors," it said.

- standard

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