The bears continued to dominate transactions on the local bourse as most heavyweight counters depreciated in price, causing the mainstream ZSE All Share Index to dip further by 3.04% to close at 13,245.47 points.
Advisory firm IH Securities observes that macro-inputs, such as exchange rates and policy changes, have a larger correlation with stock performance than fundamentals.
Regulationally speaking, the stabilization and contractionary measures that have been implemented to protect the value of the local currency have produced a shaky stability, with month-over-month inflation falling from 25.6% to 12.4% between July and August.
A total of 6,799 gold coins had been drip-fed into the market as of the last week of August, soaking up extra liquidity.
“These measures, combined with the managed depreciation of the official exchange rate, have successfully weighed down the premium to the lowest since October 2020,” stated IH Securities.
Recent policy changes limited speculators’ and arbitragers’ activities, which briefly stabilized the fair value rate.
“However, further infrastructure spend and payments to fund the 2022/2023 season summer cropping season pose downside risk to money supply growth which may have a knock on effect on inflation and exchange rate dynamics.”
From US$1:ZWL$215 in January 2022 to a peak of US$1:ZWL$790 in July, the parallel rate had declined. After the new policy changes, the rate decreased and has been stable for the past three weeks at less than US$1:ZWL$730, according to IH Securities.
Market breadth closed negative, with 10 gainers against 15 losers. The Top 10 Index suffered the most, falling 4.59% to 7,775.51 points.EcoCash lost 9.90% to end at $31.54. Delta, which had the most traded value of $167,838,950, eased 7.83% to finish at $203.02. Axia was 7.66% lower at $48.97.
Mid-tier stock CFI recorded the highest price gain of 8.18% to close at $400.25 while ZHL followed with a gain of 5.85% to close at $4.91. Brick maker Willdale garnered 5.26% to $2.00. StarAfrica increased by 1.21% to $1.65.This saw the Medium Cap Index appreciate by 0.29% to settle at 29,320.78 points.
On the flip side, milk processor Dairibord led the laggards by 11.53% to close at $19.23 while hospitality group RTG fell 6.90% to finish at $7.61.
The Small Cap Index gained the most, rising 0.38% to close at 485,942.92 points. GB Holdings added 6.59% to end at $1.98.
The market cap fell by 3.21% to $1.65 trillion.Turnover for the day depreciated by 9.46% to $296.08 million.
There was bloodshed on ETFs table. The Cass Saddle Agric remained flat at $1.5500. Also, the Morgan & Co Multi-Sector was flat at $26.5000.
In the red, the Datvest lost 2.99% to end at $1.4552 while the Morgan & Co Made in Zim fell 0.39% to $1.2500. The OM ZSE Top-10 was down 0.33% to close at $5.6058-HARARE