As the popular saying goes “what goes up, must come down”. What that saying doesn’t include are the reasons why it comes down. The ZSE had been in fine form in 2022 but the coincidence of the galloping of parallel market exchange rates and inflation meant we should expect to once again be turned to the ZSE as had been done twice before. The ZSE tried to self regulate but the axe was eventually swung. This time it was favourable with the government simply asking for a piece of the pie rather than closing the market, while also curtailing lending activities that were believed to be responsible for the flow of money into capital markets, the parallel market and the general economy. The results were two terrible weeks for ZSE investors though the market showed some resurgence toward the end of the month as the new policies had been digested and some lifted altogether. The net result was an 18.47% retreat in the ZSE.
Month Change %
The first thing you will notice is our little table there. It usually comes at the end of the paragraph and it’s usually top 10 gainers. We also tend to leave the non-movers to either a passing mention or bundle them with the losers. So slim are the pickings on the ZSE for May 2022. Only 6 counters managed to move into positive territory, CFI doing so quite impressed with a 32% gain in a very tough month. Getbucks, African Sun Unifreight and First Capital registered positive returns despite some of them holding back full-year financial reports which were originally due by the end of March. SeedCo Limited rounds up the gainers. The 3 non-movers for the month feature regular non-mover ZECO, the smallest volume counter CAFCA and Finsec listed Old Mutual Zimbabwe Limited which doesn’t register much action regularly as well.
Month Change %
This month with so many losers we thought it best to show the bottom 20 as opposed to the usual 10. There are some big names in there. Some big names like Axia (-36.12%), Ecocash (-32.07%), Simbisa (-30.83%) and ART (-23.50%) had been among the early pacesetters for the year 2022. Construction materials manufacturer Turnall was the biggest loser shedding 45.95%, engineering concern General Beltings Holdings also shed a massive 42.67% while First Mutual Properties shed 41.18%. In a month where very few counters were spared the table makes grim reading. However, those with a keen eye and understanding will be aware that some of these companies are still fundamentally intact and what changed was the market appetite, coerced by regulation, rather than the value of the companies.
VFEX, ETFs and Indices
The VFEX which is usually quiet saw the tumbling of Bindura Nickel Corporation by 34.38%. That’s a pretty big cliff to drop off for something denominated in US dollars. The other mover was Padenga which edged out 5.87% gains in the month.
The Old Mutual Top Ten ETF gave up 11.18% in the month while the Datvest Modified Consumer Staples gave up 8.83% as both suffered major shocks to the Net Asset Value (NAV), though the latter is still trading at a heavy premium to its NAV. The Morgan and Co Multi-Sector ETF emerged as a dark horse gaining 12.04% in May.
|All Share Index||-18.74%||113.19%|
|Morgan & Co Industrial Index||-26.06%||45.67%|
|Morgan & Co Financial Services Index||-15.95%||58.15%|
|Morgan & Co Consumer Sector Index||-16.86%||113.51%|
|Morgan & Co Food & Agriculture Sector Index||-7.53%||94.97%|
|Morgan & Co TMT Sector Index||-21.53%||178.30%|
|Morgan & Co Banking Sector Index||-16.47%||107.59%|
|Morgan & Co-Insurance Sector Index||-7.76%||36.89%|
|Morgan & Co Manufacturing & Logistics Sector Index||-31.30%||27.21%|
|Morgan & Co Mining Sector Index||-34.52%||175.00%|
|Morgan & Co Real Estate Sector Index||-32.40%||-0.34%|
|Morgan & Co Tourism & Hospitality Sector Index||1.93%||40.38%|
|Morgan & Co Consumer Non-Discretionary Sector Index||-18.34%||104.32%|
|Morgan & Co Consumer Discretionary Sector Index||-17.00%||125.23%|
|Morgan & Co VFEX Index||-4.76%||-6.97%|
A look at the indices shows us just how bad May was and puts into contrast how good 2022 has been with the YTD column. The Real Estate Index was plunged into negative YTD territory thanks to May losses. Bindura’s decline pulled the VFEX further down. While Hospitality and Tourism somehow found positivity in May. With the all-share index up 113% and the top 10 up 125% that’s still over double your money in under half the year. To cement this let’s look at the top gainers YTD.
ZECO returns to its catfishing status as the top gainer in 2022. Axia, despite a bad month still second while recently unbundled Tanganda made moves into the top 10 with its impressive returns. The ETFs are also in great territory all of them returning over 100% YTD. The rest of the list is what you’d expect save for 1 or 2 anomalies. So is the sky falling? Not yet. Not with the present rules in place. A change in the rules, to say something like 40% capital gains tax could certainly send the sky falling but as things stand the ZSE has resumed its bullish ways.