Elections and foreign investors on ZSE

via Elections and foreign investors on ZSE – The Zimbabwe Independent by Rob Stangroom September 27, 2013

Given that the new Zimbabwe Stock Exchange (ZSE) Data Portal (www.zimbabwe-stock-exchange.com) publishes the total value of shares bought and sold by foreign investors on a daily basis (which is handy information to have), I thought it necessary to review what foreigners were up to on the ZSE in the period between May 1, 2012 to September 20, 2013, that is the 15 months prior to, and the period immediately post-elections.

Of the total US$624,8m shares traded on the ZSE from May 1 last year, foreign investors accounted for US$262m 42%.

The ZSE Industrial Index rose over this period by 48% but corrected sharply by losing half its gains on negative sentiment arising from the election results.

Did the proportion of foreign investment change much in the period to and leading up to the elections? No, actually. This is very much in line with the period from multicurrency system in February 2009 to 1 May 2012.

So what about the quantum of foreign investment? Foreigners were net buyers of US$126m worth of shares, in other words they bought more than they sold and this money came into the country.

That trend may be changing because in the month-to-date as at September 20, 2013, for the first time since June 2012, foreign investors on the Zimbabwe Stock Exchange were net sellers, having sold US$ 2,2m more than they bought.

So in which companies were foreign investors investing?

I took the top 10 companies by trading value and recorded net foreign investment or sales in them. Foreigners were net buyers of US$46m worth of Econet shares; they were net buyers to a similar level in Delta Corporation, with Innscor a distant third at US$12m. All in all, these companies account for more than 95% of the net US$126m injected of into our economy during the period. It’s clear foreign investors like telecoms, beer and retail.

Source: Big Law IR

Much has been said about the relevance of having 65 listed companies when only a few trade and account for a significant proportion of actiivity. It’s a valid point when you consider the 10 companies above accounted for 83% of the total value traded on the ZSE (including special bargains).

Investor sentiment may be less about politics and the elections and more about business and how the ZSE’s top companies perform. The Industrial Index is slowly rising again, albeit marginally and on lower liquidity than usual; so the up-coming reporting period for June 30 year ends and half year ends will tell us more.

Word from the brokers in town is that selling pressure is still there, which suggests the net foreign selling seen this month will continue on the back of profit-taking.

The ZSE Data Portal offers the ability to receive these corporate results directly into your email.

Rob Stangroom is the CEO of Big Law (Pvt) Ltd a leading online investor relations company which runs African Securities News (w.w.w. africansens.com) and The Investor Mailing List.