The Zimbabwe Stock Exchange (ZSE) has breached the ZW$ 5 trillion market capitalization amid severe local currency depreciation.
The Zimbabwe dollar has fallen by 42 percent on the Reserve Bank of Zimbabwe (RBZ) auction system since the start of the year with authorities blaming its contractors of development projects for fueling exchange rate fluctuations by flooding ZWL balances on the market in search of USD currency.
At the close of yesterday’s trading, the ZSE was valued at ZW$ 5 041 521 410 135.
“We are of the view that we will continue to see strong correlation between money supply and ZSE stock market performance,” said research firm, IH Securities in its latest monthly snapshot.
However, the ZSE remains undervalued with the bourse valued at just US$ 2 billion in real terms using the 2500 premium parallel market rate.
The development is reminiscent of the pre-dollarization period when the Zimbabwe dollar devaluation entered unchartered territory.
This has seen many stocks on the ZSE largely undervalued which has been a huge turn-off for most investors. In response to this, there has been a significant migration by some ZSE-listed companies to US$ -denominated Victoria Falls Stock Exchange (VFEX) to preserve value.