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Foreign inflows down 45% on ZSE as settlement issues continue to hamper activity



Data from the Zimbabwe Stock Exchange shows that the bourse closed the eight months to August with a negative sellers’ position of $33.07 million against a positive favourable buy position of $1.59 million in the same period last year although overall, 2015 closed the period with a negative outflow of $4.32 million.

Foreign inflows amounted to $49.79 million, a decrease of 45.68% from $91.66 million same period last year. Foreign outflows were at $82.86 million against $90.07 million achieved in the same period last year. Activity on the exchange has been on the decline for the better part of this year. While economic and subsequently company performance is weak, sentiment is mainly being driven by the delays in settling foreign obligations transacted on the ZSE which have all but made a mockery of the T+5 settlement system at a time the industry was moving towards a shorter settlement cycle. Generally, if funds are held up for over five days, investors cannot reinvest more quickly. A shorter cycle builds up liquidity.

Settlement of dividends and investment proceeds is on Priority List 1 of the Reserve Bank of Zimbabwe’s foreign payments plan. However, most investors have experienced delays of up to three or four weeks in the remittance of proceeds by the banks, one bank in particular while there are also reports that stockbrokers are not being given equal priority in the settling of payments.

The RBZ together with the ZSE has given assurance that settlement of trades are top priority but the situation has not changed performance with average turnover for September currently below $200 000. Foreign investors have over the years made up over 60% of ZSE participants. “Settlement assurance is vital for the market to retain and keep attracting investment from outside the country. Global investors need to be assured that, if they trade in Zimbabwe, their trades will settle seamlessly and this is why we made it top priority,” said RBZ governor Dr John Mangudya recently.

Overall turnover in the eight months was at $108.20 million against $172.49 million recorded in the comparable period last year.

Meanwhile the ZSE Industrials closed Tuesday’s trades with a marginal 0.02% gain to 98.89 while the Minings Index was unchanged at 26.32. Turnover for the day was at $271 376. Foreign buyers were at $48 189 and foreign outflows amounted to $178 090. There were 43 trades in total.

There were no fallers on the price sheet, but Turnall gained 0.05c to 1c to lead the risers. Turnall is currently under the spotlight over corporate governance and mismanagement issues which have mostly implicated the FD Kenias Horonga.


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