Reservations among certain investors on Zimbabwe Stock Exchange over monetary issues have driven bullish sentiment on ZSE stocks including fungible Old Mutual whose stock is trading at a premium to other markets. Zimbabwe’s biggest insurance and property group’s stock, at 338 cents, appears to be trading at an average premium of 40 percent to other markets such as the London Stock Exchange and the Johannesburg Stock Exchange.
Equity analysts said on Friday that the reservations among certain investors about impending introduction of bond notes, whose value is pegged one-to-one with the US dollar, was partly the reason the stock has continued to appreciate over the last four months.
“Everyone sees it as a safe haven and the stock to hedge against anything undesirable they think might happen in the domestic economy. It is the local guys who are buying to hedge against bond notes. Investors are thinking about what happened in 2007-2008,” said a Harare analyst with a reputable securities company.
Old Mutual closed at 338,74 cents on Friday after gaining 1,56 percent to close a week where the ZSE posted strong gains. The stock is trading around 236 cents on the London Stock Exchange.
Reserve Bank of Zimbabwe governor Dr John Mangudya has repeatedly said all was on course for the introduction of the surrogate currency, which the central bank will introduce to monetise a 5 percent incentive to exporters, corporates or individuals, who generate much needed hard currency for the cash starved economy.
The ZSE main industrial index gained a weighty 4,19 percent last week, as the stock market maintained its positive momentum. Market capitalisation rose 4,56 percent this week to close at $3,77 billion, yielding year to date gain of 17,38 percent.
On the other hand the mining index rose 26,10 percent to 49,04. Trading in heavyweights this week was firm with Delta rising 6,23 percent to 81c, Econet up 5,36 percent to 29,50c and BAT gaining 6,45 percent to trade at 1,650c.
The week’s largest gainers were Bindura, up 45 percent to 3,48c, Proplastics, which added 33,33 percent to 4c and Zimplow 32,16 percent higher to 3c. The week’s only loss was recorded in ZPI, down 10,11 percent to 0,8c.