The Zimbabwe Stock Exchange showed signs of weakness yesterday on its first day of trading following the introduction of a new foreign currency trading system.
The ZSE has been on a rally for the better part of the year, with market watchers attributing the positive gains to investors wanting to hedge against inflation and currency instability.
Inflation was recorded at 786 percent at the last count in May 2020, while the parallel market exchange rate was anything between 80 and 100 against an official peg of 25.
Investors thus looked at the stock market as a safe haven for value preservation.
Demand for stocks, however, saw some share prices performing better than inflation even in US dollar terms.
Using parallel market rates the ZSE market capitalisation was valued at US$1,2 billion at the close of 2019, but is now valued above US$2 billion.
The introduction of the foreign currency auction trading system could, however, see investors having a relook at their stock market investments.
The first day of currency auction saw the official exchange rate move from 25 to 57,35 against the green back.
As of yesterday, trading was still mixed with some 19 gains and nine losses having been recorded.
Heavyweight stocks such as CBZ, Delta, Padenga and Econet closed negative resulting in the ZSE Top 10 Index closing 0,22 percent weaker.
However, the All Share Index, still closed positive following strong gains in ZB Financial Holdings up 19,89 percent to 1 050 cents and GB Holdings up 16,67 percent to 17,50 cents.
NMB, African Sun and Bindura were also among the risers.
More than $40 million was invested with Delta getting $9 million while Old Mutual, Innscor, Econet and First Mutual Life all got above $3 million worth of investment.–ebusinessweekly.co.zw