The ZSE On The Rebound As Foreigners Remain Net Buyers, Enticed By Old Mutual

The Zimbabwe Stock Exchange (ZSE) closed weaker ahead of the festive period last year as both the Mining and Industrial indices dropped. The year did not end well for the ZSE as their website was hacked as both the indices continued to drop points.

The new year came with the announcement that the ZSE would be rolling out an All Share Index as well as a Top 10 Index effective January 1st. The All Share Index is exactly what it sounds like, an index which includes all the counters on the exchange, mining and industrial.

The Top 10 Index is also easy to understand, it is an index of the 10 biggest companies on the exchange. It is based on overall size of listed companies’ market capitalisation (share price multiplied by number of shares.) Review of constituents of the Top 10 Index will be done quarterly. 

The All Share, Top 10 and Industrial Indices all opened the year on a low note losing 2.15%, 2.96% and 2.10% respectively. The Mining Index was flat.

The week ending 5 January 2018 however saw all the Indices except for the Mining Index close higher than the previous week. This was mainly because of Old Mutual’s gains. The Mining Index remained flat.

Old Mutual

Old Mutual gained 2.5% in the week to trade at $4.7284 on the 5th of January. This was after the counter had lost 14.9% to open the year, dropping from $5.5206 to trade at $4.7000 on the 2nd of January.

There has been interest in Old Mutual shares by foreigners especially. This is because the Old Mutual group announced that it plans to break the group into four independent businesses. Upon completion of the separation of the group’s units, holders of shares will likely see significant profits.

When the business units are separated, shareholders will likely be issued with more shares as history has shown in these type of transactions. This will lead to huge profits for the shareholders, which is the big reason for foreigner interest in Old Mutual shares.

This interest in Old Mutual is probably the reason why foreigners remain net buyers on the ZSE as a whole.