We’ve covered the Zimbabwe Stock Exchange indices and how they work before. Most reporting is done on the market indices (Top 10, Small Caps, Medium Caps) but there are also sector indices and these can give us a little more information about the economy in general based on market sentiments. I’ve compiled the data for the Sector indices as at 31 May 2021 to assess the performance in the year so far as well as compare the indices and see what nuggets we can glean from the data.
The financial sector index is lagging behind the others. This is important considering that financial sector companies have a December reporting date and these are among those that have been allowed continuous extensions on publishing their reports. This is good for management but not so good for investor confidence which has clearly taken a hit. There are other issues at play here including ZB’s cash in transit heist which has raised concerns over the general ability to secure money and FBC Bank which has a case before the courts that involves allegations of attempting to bribe a judge.
Mining still in the dark
The mining index, small as it is is not having a day in the sun either. Mining has been plagued with many problems and the effects are definitely showing on the stock exchange. While mining is doing better than financials, the latter have a foreseeable recovery opportunity soon. The same cannot be said for the minerals counters. The push to have mining companies list on the Victoria Falls Stock Exchange (VFEX) may help but it has greeted with radio silence by the listed mining companies.
Industrials top the lot and it makes sense
Industrial counters have the best performing index year to date. In a country that has in the recent past seen more dominance from retail and consumer counters, things have changed. Consider the larger effect of the border closures and lockdowns put in place to deal with the spread of the coronavirus pandemic. Local production received a much-needed kick up the backside. Investor confidence in the industrial index is reflective of matters on the ground.
Real estate surprisingly doing well
Perhaps the biggest shock is the performance of the Real Estate index. By all counts, the coronavirus pandemic has put them in a spot of bother. However, the reality is that while businesses have shunned the CBD of cities they have a preference for office parks and guess who owns those too? That business segment coupled with residential property have buoyed the business of many property companies and in turn, investors have showed renewed confidence in the sector.
Consumer bang average
Consumer indices have performed at the average. Playing very close to the ZSE All-share index year to date return. Part of this can be explained by the dominance of the consumer counters on the ZSE and therefore their forming the bulk of the results. The performance is by no means bad, with Discretionary up 104.38% and Staples up 119.04% versus the All-Share index’s 105.41%. Retail has been in a bit of a weird spot with lockdowns and other effects experienced in 2020 and 2021.
Materials and ICT posted strong performances but you would feel that ICT should be having a moment in the sun given the increase in remote transacting. However, the impact of regulatory measures slapped on Cassava Smarttech cash cow EcoCash in 2020 has gone some way towards mitigating the gains that should have been realised. All in all the picture reads very well from a sector index perspective. Even though financials trail others you’d be hardpressed to find an investment that offers you 46.99% return in 5 months (that’s 112.78% annualised).