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Enacy Mapakame, Harare Bureau

The country’s biggest financial services group, Old Mutual, was the hottest stock in 2019 accounting for 20 percent of the total value traded.

This was driven by renewed need to hedge against the challenging economic environment. 

Old Mutual is a fungible stock and became a vehicle for repatriating investments out of the country, at a time foreign currency became scarce and therefore difficult for investors to repatriate their funds.

“As Zimbabwe continued to struggle to remit foreign payments on the back of an acute shortage of foreign currency, the fungible Old Mutual Stock became a quick favourite among investors for remittances, even the introduction of a 90-day vesting period did little to suppress appetite for the Old Mutual Stock,” said stock brokers EFE Securities in their 2019 Review and 2020 outlook report.

“The rest of the top traded stocks were dominated by the market’s blue chip counters with foreign investors driving the disposals with proceeds mostly finding their way into Old Mutual stock,” said  EFE.

By close of the year, the financial  services giant was pegged at $36,50, maintaining the second most expensive stock on the bourse after BAT’s $47,75 and is expected to remain a favourite even in 2020 together with counters with foreign currency exposure such as Padenga.

Other big cap counters, Delta, Econet, Cassava and Innscor, were among the top traded stocks in the year.

Delta contributed 17 percent of total turnover followed Econet at 16 percent. Fintech group — Cassava accounted for 13 percent while industrial conglomerate, Innscor claimed 6 percent of total traded.

In terms of performance in US dollar terms the activity was the lowest in three years falling by 53 percent for the year closing at US$434,7 million.

The worst performance in a decade was experienced in 2016 when only US$193,9 million was recorded in the year.

Said EFE: 

“Weighing on the market was a combination of a fast depreciating currency coupled with weak demand that saw foreign investors largely in a sell-off as they deserted the market in droves in the falling economy’s wake.”

As currency depreciation set in during the year as well as inflationary pressures coupled with foreign currency shortages and waning consumer spend, the stocks also suffered in 2019 and failed to keep up with the rate of inflation.

EFE Securities, however, forecast the stock market will this year play catch up on inflation and currency depreciation in an attempt to recover lost ground following its relative poor showing against these two measures.