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The dominance of bears on the ZSE confirms why 11 firms exited the liquidity-strapped bourse last year alone.

AN erosion of share prices has continued to rock Zimbabwe Stock Exchange (ZSE)-listed companies since the start of the year, with some stocks shedding more than 50 percent of their value.

The dominance of bears on the ZSE confirms why 11 firms exited the liquidity-strapped bourse last year alone.

At least half a dozen other firms could be headed for ZSE exit doors in an ironic twist for an equities market once voted among Africa’s best performing a few years back, but has witnessed an extensive flight of capital due to an economic malaise.

The situation has hurt even shares once perceived to be bellwether stocks, whose values have been heavily diluted since dollarisation in 2009.

An analysis of the performance of ZSE counters by insurance giant, Old Mutual Limited’s banking unit, CABS paints a bleak picture of the ZSE, with 34 out of the 60 counters enduring losses in the five months between December 31, 2014 and May 21, 2015.

This represented 57 percent of counters that have succumbed to a market devastated by a liquidity crisis.

Some counters have since de-listed while others are barely trading.

Falgold, hit by the heavy retreat in international metal prices and the general difficult trading environment in Zimbabwe, shaved a massive 86,67 percent of its value during the review period.

Another gold miner, RioZim, which has found the going tough in Zimbabwe with high gearing and resignations of chief executive officers, has lost 60 percent of its value.

Horticultural concern, Ariston has lost 42,86 percent, telecoms giant Econet shaved 23,17 percent, cement producer Lafarge 27,27 percent, Meikles Limited 54,84 percent, banking group NMBZ 22,22 percent, cement producer PPC 31,43 percent, Willdale 50 percent and Bindura 37,50 percent.

Counters that have gained value include spirits producer AFDIS, ART- which has gained by 100 percent and ZPI, which had put on an extra 57,14 percent-by May 14, 2015.

It is not surprising for analysts that ZSE firms have been on a free fall, and many project the bears to continue dominating the stock market for some time.

“Unless and until viable economic and investment policies are put in place by government, we don’t see the free fall of stock values changing,” said Tapiwa Chitsvaro, an economist at research firm, Trade Winds.

“We are actually seeing a further plunge in share prices as we move into the second half of 2015. The market needs substantial injection of liquidity for the market to rebound. In the short term, we don’t foresee this happening,” he said.

A total of 16 companies have de-listed from the ZSE since 2009, when the country adopted a hard currency economy to deal with a hyperinflationary scourge that left everyone, and everything, miserable.

Eleven of these companies delisted from the ZSE last year alone, primarily due to liquidity challenges that have resulted in companies failing to raise money on the stock market and attracting new investors to inject fresh cash.

More companies are expected to delist this year.

Retail and hotel group, Meikles, which was suspended earlier this year after a tiff with the ZSE, has warned that it is contemplating its future on the bourse.

Dawn Properties could give the bourse its back after announcing it would be buying out minorities and exiting the stock market.

African Sun, whose chief executive officer resigned, is also a candidate for de-listing following shareholder changes in the past few months.

Source : Financial Gazette