The Zimbabwe Stock Exchange (ZSE) fared well in its performance compared to regional peers last year in US dollar terms, according to the African Financials’ Sub Sahara Africa Top 30 Companies report.
The report says the regional stock markets (excluding South Africa’s) rose by an average 4,5 percent in US dollar terms in December 2022. The growth, according to the report, is a significant achievement as it is driven by strong earnings growth and overvalued stocks.
However, on average, they are down by 11,6 percent year to date.
The report shows ZSE paced the fastest during the month of December with a 43 percent increase followed by Ghana and Seychelles with gains of 31 percent and 18 percent, respectively.
Whilst the local currency-denominated ZSE has faced challenges in the last year including high transaction costs and acute regulation, the bourse managed to record gains surpassing regional peers.
The report also highlights several companies from the region that managed to reach the US$800 million capitalisation mark during the year such as Australia Stock Exchange listed platinum producer – Zimplats valued at US$1,87 billion.
“The key markets in sub-Saharan Africa that have done well include Nigeria and internationally listed stocks, which make up about 35 percent of the top 30 companies.
“Additionally, the telecoms and technology sector has also seen growth with new listings, including companies such as UAC foods in Nigeria, UAC cement in Nigeria, Orange Code d’Ivoire, and African Oil.
“However, there are very few companies from South Central Africa, including Zimbabwe, Zambia, Malawi, Botswana, and Namibia, that have reached the critical level of market capitalization of US$800 million,” reads part of the report.
But the report highlights that despite companies in the regions still lagging behind the US$800 million capitalization mark, the year 2022 was a good year which saw them record growth in earnings at a time other global businesses have struggled with massive job cuts, losses and low investor confidence.
Big companies like Amazon have lost as much as over US$800 billion in market capitalisation in 2022 alone, as the tech giant battled diluted consumer demand and job cuts.
“In the year to September 2022, sub-Saharan Africa’s markets, excluding South Africa, have performed relatively well compared to international markets. This is a significant achievement as it is driven by strong earnings growth.
“Another interesting aspect is the level of profitability of these companies, many of which have shown significant earnings growth and positive growth of US dollar earnings in 2022, even while other markets are facing issues of profitability and indebtedness,” says the report.
During the year, businesses world over were affected by the adverse impacts of the war in Ukraine, which caused supply chain disruptions.
This came at a time economies were still trying to recover from the effects of the Covid 19 pandemic.
Despite these challenges, listed companies reported positive earnings performances for the year driven by firm demand. Companies like Delta reported increased volumes performance for the nine months to December 31 2022 on the back of solid demand across segments.