Challenging the ZSE's "top performing stock market" narrative

Author Name
Rugare Mukanganga
Stock Market 2 months ago

After surpassing its own performance record (again), the ZWL-denominated exchange extended 2021 gains as the market’s counters continue facing economic uncertainties in the closing quarter of the year.

  • Index up 198% YTD
  • ZWL continues to depreciate
  • Parallel market remains out of control

Unlike steady-moving regional peers, the ZSE’s All Share Index (ASI) has nearly doubled its 2020 year-end position of 2636.34, closing trades at 7866.84 on Friday 24th September.

Regional Peers


Down in South Africa, the JSE’s 331 listings have driven the market up 7.81% YTD as of 24 September this year. Looking at the market’s environment as a whole, South Africa compares more favourably to Zimbabwe in terms of economic stability and investment security for both local and international investors. In terms of composition, the JSE also has a broader portfolio, with listed counters ranging from South African and international tech, construction, real estate, food, beverage and hospitality-based firms – a contributing factor  to diversified growth. 


A stone-throw away from Zimbabwe’s VFEX, Lusaka Stock Exchange’s (LuSE) set of 24 listings have yielded the LuSE a YTD growth of 25.13% at the end of last week’s trading day. In addition to familiar counters such as British American Tobacco and Delta Beverage’s National Breweries, a quarter of the exchange is made up of mineral commodity and energy sector firms with the former riding on commodity price rallies this year.  But with heightened prospects of an economic rebound spurred by the country’s new presidential administration and its ambitious manifesto, the LuSE is expected to take second preference to broader economic investment.


West of the ZSE are the Botswana and Namibian Stock Exchanges with their 0.11% and 15.43% YTD gains as of Friday September 24th respectively. Both economies, like South Africa and Zambia are characteristically stable, with no notable medium to long-run shocks that could generate an unusually high listed equity appetite as seen on the ZSE.

The ZSE’s nine-month rally has therefore led to a media and regional analyst consensus that the bourse is “the best performing stock market in the region”.

On the one hand, the surge reflects a profitable 2021 for local equity investors and depending of course on individual counter and portfolio management throughout the year, an inflation-beating set of investments.

The other side of this year’s mostly positive performance narrative highlights net selloffs by investors abroad, skewed price upsurges at times driven by speculative sentiments and market price variance concerns cited by the ZSE’s listed counters.

Net Selloffs

Part of the selloff issue can be attributed to a challenge of slow or delayed remittances investors abroad face when liquidating their ZSE positions. An additional concern these investors might have is, despite having a clear opportunity to create returns on investments, the market’s regulatory front has a painfully inconsistent history of prejudicing individuals and firms in the economy and beyond – case in point: Old Mutual Zimbabwe, PPC and SeedCo International’s 2020 trade suspension on speculative allegations of ZWL:US$ exchange rate manipulation.

Price Rallies

A memorable example is the 2021Q2 GetBucks and Medtech frenzies that had analysts debating while social media fuelled demand for the counter – all this in the absence of concrete underlying value drivers.

Price Variance

A key factor is the value chasing aspect of the market. There has been a dash to protect value as well as speculative manouvres in light of the freefalling exchange rate. The market has been adjusting the ZWL prices on shares to mirror the exchange rate and thus restore value parity. In recent weeks however, the ZSE lost momentum, as traders panicked following the injection of over half a billion dollars in IMF SDR. The panic selloff which led to prices climbdown was based on the view that the shot in the arm will restore ZWL value and bring competitiveness to the market. In light of sustained inflationary pressure it is likely that investors will keep pushing prices up.


The three issues outlined above collectively challenge the popular narrative that the ZSE is the top equity market in the region this year.

As an investor, one should identify and evaluate the set of performance drivers before making an informed assessment of the ZSE. Behind the prevailing performance narrative lie issues such as hyperinflation, heavy-handed state intervention in an apparently open market and currency concerns yet to be fully addressed.

Yes, the ZSE is performing well in 2021 by returning significant gains on investment but what's behind the growth. These matters also border on risk and return. With high volatility comes gaps of huge gains or losses, which some investors have appetite for. But for purposes of effectively evaluating market strength, the current ZSE largely reflect less on underlying companies performance, which is the best underlying performance indicator, and not merely the nominal movements in stock prices.







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