Zimbabwe Stock Exchange (ZSE) heavyweights took a significant hit in 2024, with Delta Corporation, Econet Wireless and CBZ Holdings collectively shedding US$355,33 million market capitalisation (market cap).
This week, analysts blamed the losses on a liquidity crisis roiling the economy.
Beverages maker Delta lost US$206,64 million of its market cap during the period, followed by CBZ at US$131,03 million and Econet at US$17,66 million.
The year ended with Delta having a market cap of US$711,22 million, Econet (US$374,34 million), and CBZ (US$173,10 million). These three firms are the mainstays of the ZSE and are often regarded as the most stable counters.
While they suffered losses on the bourse, their total assets painted a different story.
Delta’s total assets stood at US$414,73 million as of September 30, 2024, up from US$403,91 million during the same period the previous year, showing a gain of nearly 3%. Econet’s total assets as of August 31, 2024 were valued at US$470,43 million, down from US$719,87 million a year prior, a loss of nearly 35%.
Morgan & Co senior analyst Tafara Mtutu told businessdigest that the losses were a reflection of a liquidity crunch that has haunted the economy in the past year.
“This is something that is noticed in several counters, but notably in Delta and Innscor Africa Limited. Those two companies have been heavily invested in their own operations for the past couple of years, and that is driven by the need to have cost-efficient machinery,” Mtutu said.
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“But, we have not seen that translate to higher market capitalisation on the stock exchanges they are listed on. However, that is not to say there is something wrong with the businesses, but rather it has to do with the capital markets themselves.
“We have seen them grow revenue over the years, but we have not seen that translate into higher prices on the stock market, and that is mainly because liquidity has taken centre stage on the local capital markets.”
This comes as most of these assets are tied to trade and other receivables.
As their financial report are stated in Zimbabwe Gold (ZiG), this translates to significant balance sheet erosion.
Fincent Capital research analyst Kudakwashe Taimo said there had been a lack of clarity regarding Econet’s strategy, including the benefits of acquiring loss-making non-banking assets from EcoCash.
“Additionally, negative sentiment arose around Starlink’s potential market entry, which was perceived as a threat to Econet’s data market share,” Taimo said.
“The Reserve Bank of Zimbabwe’s stringent liquidity policies have affected Econet and other listed companies, including Delta.”
He added that the September 2024 devaluation of ZiG was a notable example, as afterward most listed stocks failed to reprice to reflect their true values due to liquidity constraints.
“The rights offer last year also pressured Econet’s share price. The company had US dollar-denominated debt, yet at times was required to price its services in local currency, which was vulnerable to inflation,” Taimo said.
“As a result, repaying the same debt required increasing amounts of local currency, making the loans more expensive. This financial strain negatively impacted Econet’s market perception and, in turn, its share price.”
CBZ’s total assets were valued at US$1,2 billion as of September 2024, down from the prior year’s US$1,21 billion.
He said the collapse of a proposed merger between CBZ and ZB Financial Holdings Limited, compounded CBZ’s situation.
He said the uncertainty surrounding the deal sparked mixed reactions, which were significant in affecting CBZ’s share price.
Analysts said these companies were fundamentally strong, but external market forces — especially tight money supply and investor caution — were preventing their stock prices from appreciating.
For example, as of last Friday, CBZ’s market cap had gained US$14,36 million since the start of the year. Delta and Econet, however, have both seen a further US$60,35 million and US$33,35 million, respectively, eroded from their listed values.
As of last Friday, Delta’s market cap was valued at US$650,87 million, Econet (US$340,99 million), and CBZ (US$187,46 million).
Advisory firm FBC Securities said while the ZSE remains the dominant exchange, its performance is increasingly driven by inflationary trends and local speculative activity rather than fundamental growth.
“The ZSE is dominated by traders rather than investors, so its performance is closely linked to fluctuations in the monetary sector — it rallies when volatility increases, as traders pursue short-term gains through inflation hedging, and falls when inflation hedging activity declines,” FBC Securities said. “However, that trend is not sustainable as it increases the swings (volatility) of the market. Policy consistency and improved ZiG liquidity could sustain gains in 2025.”
