Zim Digital Sunday Express
June 18, 2021

The Zimbabwe Stock Exchange (ZSE) a good hedge against the vagaries of inflation and the RTGS currency

Now that you know ZSE is a heaven on earth market, here’s hpw to pick the right stock

By Desire Muchipisi

After my debut in The Sunday Express newspaper last week – and getting some very good feedback from the readers of this newspaper – this week I decided to come back and write about investing on the ZSE.

In an inflationary environment stocks tend to be a good hedge against currency depreciation.

In Zimbabwe it is very difficult to save using the local currency (RTGS) because of its instability and most people prefer to convert the RTGS to USD (sometimes the South African Rand) which is deemed to be a stable currency, but this is costly.

Another way of protecting your hard-earned money (RTGS Currency) which is overlooked is to invest on the Zimbabwe Stock Exchange (ZSE).

The Zimbabwe Stock Exchange is a capital market where shares are traded (buying and selling of shares), like we have a market for clothes (where people buy and sell clothes).

 

The Zimbabwe Stock Exchange is not any different from such markets maybe, except in terms of how it is regulated.

It is regulated by the Securities Exchange Commission of Zimbabwe (SECZ).

The easy way to understand shares and shareholding, For instance take a company as a huge loaf of bread with as many slices as you can imagine.

Each and every person who has a piece of slice in that loaf is called a shareholder and the piece of slice is a share.

The slice has a monetary value, which is called a share price. The more money you invest in the loaf of bread, the more slices you possess.

 

 

Basically shareholders are the owners of the company, in this instance each and every individual who has a slice is the owner of the loaf.

All the shareholders are entitled to voting rights, and the influence one has depends with the number of shares he holds; the more slices you have, the more power you have in decision making.

There are many types of shares but at the moment the Zimbabwe Stock Exchange-listed companies only have ordinary shares.

There are currently 63 companies listed on the Zimbabwe Stock Exchange.

To clarify, if for some reason one is worried about a huge jump in prices (inflation) during the next few months, putting (or keeping) your money in stocks might not be the best idea.

 

 

If, however, you are simply looking to protect yourself from the long-term effects of inflation, a diversified portfolio of stocks should get the job done quite nicely.

A portfolio can be defined as a combination of shares from different companies (having slices of bread from different loaves e.g Lobels or Bakers Inn).

The question now is, How does an ordinary citizen invest on the ZSE? Well, if there is anything that is easy to do that’s definitely investing on the ZSE.

Back in the traditional days one had to visit his broker to get the deal done, not anymore because technology has made it easy and convenient.

There are two online platforms which one can use to purchase shares on the Zimbabwe Stock Exchange that is the ZSE Direct (www.zsedirect.co.zw) and C Trade (www.ctrade.co.zw).

It is very simple to create an account, you only need to provide basic information, and for more information you can visit any of the websites. You can do your research on which platform to use, personally I use both platforms and I have good testimonies.

 

 

There are 17 stockbroking firms, find out more on this site (https://www.zse.co.zw/stock-brokers/) and choose any.

Now the question is, Why should one invest on the Zimbabwe Stock Exchange? The performance of the stock market in the past 2 years does answer that question.

In 2019 the stock market closing value was ZWL 29.7 Billion and in 2020 it was ZWL 317.8 Billion (which is +970% gain beating the YoY inflation of 622.78% on 31 December 2020).

In USD terms in 2019 it closed at USD 1.8 Billion and USD 3.8 Billion in 2020 (+115% gain using the official exchange rate of 16.7 and 81.78 respectively).

In 2019 the closing value was USD 1.17 Billion and USD 2.7 Billion in 2020 (+130% gain using the black market rates 25.38 and 115 respectively).

This shows that the market managed to perform at highest level during the hard period of the COVID 19 pandemic.

 

 

In 2021 in terms of Year To Date in USD terms the Zimbabwe Stock Exchange is the best performing in the Sub Saharan region with over 60% capital gains using the official exchange rate of USD/ZWL 82.00.

Now that you know ZSE is a heaven on earth market, you wondering how one picks the right stock.

There is no correct answer to this question, one need to research about the company or seek professional advice from brokers or research analysts.

To learn more about ZSE and stocks take this free short course https://zsetraining.co.zw/ and read the ZSE investors guide which you can find ,from the ZSE website (www.zse.co.zw).

Invest on the ZSE and the market will coordinate time with interest. #Happy investing

Desire Muchipisi is a student of economics and currencies. He writes for the Sunday Express in his personal capacity.

 

 

 

 

 

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