Institutional investors leave, correcting ZSE

Institutional investors leave, correcting ZSE
Published: 08 March 2018
PENSION funds and insurance companies have not invested heavily in stocks on the domestic bourse since the ascension of President Emmerson Mnangagwa last year, an Insurance and Pensions Commission (IPEC) official has said.

IPEC manager of pensions Nhau Chivingira said the Zimbabwe Stock Exchange (ZSE), which saw a relentless bull run fuelled by inflation fears for close to a year on the back of massive investments from pension funds and insurers, had experienced improved confidence, peculiarly reflected in a downward spiral, which market analysts attribute to self-correction.

"There was a 65 percent growth in value of total assets held by insurance companies on the back of the ZSE bull run last year.

"This was the main reason the ZSE gained market capitalisation to a high of about $15 billion but is now averaging about $8 billion," Chivingira said during an insurance journalism training workshop hosted by IPEC and ZimSelector.

Chivingira pointed out that local insurance firms had a 40 percent exposure in equities on the bourse.

"The ZSE gained over 200 percent last year and what everyone fails to realise is this was because of institutional investors like pension funds which sought to hedge against uncertainty.

"However, with the coming in of the new dispensation, funds have not continued dumping cash on equities and are exploring other areas, hence the subdued performance of the market. It is highly likely that the market will remain subdued for the rest of the year, unless something happens.

"In short, this simply reflects a measure of confidence," Chivingira said.

The ZSE run started in the final quarter of 2016, when the introduction of a parallel currency, the bond note, spooked investors and darkened their outlook, sending many scurrying for cover in equities.
- fingaz
Tags: ZSE,


Latest News

Latest Published Reports

Latest jobs