RTGs money drives ZSE

Published: 05 September 2017

THE sustained rally on the Zimbabwe Stock Exchange is due to huge amounts of RTGs money that has been released into the economy by Government through debt assumption, the Securities Exchange Commission of Zimbabwe (SECZ) has said.

Addressing journalists attending a workshop on Financial Reporting in Kadoma yesterday, SECZ surveillance and risk manager Mr Noel Mahombera said although the rally on ZSE could be attributed to a number of market factors, RTGS money remained the major driver.

"The debt assumption bill saw a lot of liquidity being injected into the system," said Mr Mahombera.

"Now, this is RTGS money and it has to find a home. People can buy property locally, but they can't import anything because the money is locked in the system.

"Part of the money (consequently) gets to the market because your bank will tell you ‘you have, say a million dollars lying idle in your account, why don't you buy equities?"

"So it's part of the equation. There is a lot of money supply growth from that debt assumption bill and from the TBs that were issued to extinguish Government debt," he said.

In the week to Friday last week, the ZSE Industrials Index rose 7, 17 percent to 238, its highest since dollarisation.

This was mainly driven by gains in Daribord, Simbisa, Medtech, Ariston and Ok Zimbabwe.

Market capitalisation was 7,16 percent up at $6,74 billion from $6,29 billion recorded in the previous week.

Major value drivers for the week were telecoms giant, Econet which contributed $1,8 million followed by beverages maker – Delta, Zimre Property Investment, Seedco and PPC.

Mr Mahombera said it is however difficult to forecast how the stocks will continue but said obviously it will cool off.
- BH24