ZSE: Two more indices to enhance tracking of market performance

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  • Zimbabwe Stock Exchange profiles the Agriculture and Exchange Traded Fund indices introduced on April 1, 2022.
  • The Introduction of sectoral indices followed the adoption of the Global Industry Classification Standard (GICS).
  • The settlement base values for both indices were  placed at 100 but ZSE ETF index back-test to January 1, 2022.

The Zimbabwe Stock Exchange (ZSE) has profiled two more sector indices, the Agriculture and Exchange Traded Fund (ETF) indices. The profiles of the indices are with effect from April 1, 2022. This brings the total number of sectoral indices to ten while total market indices add to fifteen. The Agriculture index, tracks the performance of companies in the agricultural sector. The ETF index is tailor made to measure the trading performance of the three listed ETFs. In separate announcements, the ZSE said that the base value for the two indices was 100, but the ETF index back-test to January 1, 2022.

In a related article published by The Chronicle on January 8, 2020, ZSE said that the introduction of sectoral indices followed the adoption of the Global Industry Classification Standard (GICS) in the classification of listed companies. They added that the indices provided the market with better performance apparatus, and will assist in choosing sector-based investing strategies.

“The new ZSE indices were classified to provide the market with better tools for performance measurement and assist in choosing sector-based investment strategies,” they said.

Before, listed companies  were classified in other sector indices. These are ZSE material index, financial index, industrial index, consumer discretionary index, real estate index, information and communication, and technology service index. Further classification was also by market cap. This formed the ZSE all share index, top 10 investable indexes, top 10 indexes, top 15 indexes, top 25 indexes, medium cap index, and small-cap index.

Method used to calculate indices

According to an article published by The Herald on April 7, 2022, the local bourse uses the market capitalization weighting method to compute all indices. The market capitalization of a listed company is an approximation of its value on the market. To compute this value, multiply the company’s number of shares in issue by the last Volume Weighted Average share price. So, market capitalization shows the valuation investors place on an entity.

Constituents of the Indices

The Agriculture index constituents are as follows:

A table showing the constituents of the ZSE Agriculture Index. The effective date for all the constituents was April 1, 2022. [photo/ ZSE]

Ariston Holdings Limited is an agricultural-oriented company. It has six strategic business units in the eastern and northern regions. These two make its national footprint. The company has three estates; Southern estates, Claremont estates, and Kent estates. Ariston is also operational in several markets ranging from tea, macadamia nuts, horticulture, and deciduous fruits to fish farming, beef cattle, and poultry.

According to African Financials, British American Tobacco manufactures, distributes, and sells tobacco products for local consumption. Reuters adds that this makes Zimbabwe the sixth-largest tobacco grower world-wide, and the largest in Africa farming Virginia flue-cured, oriental, and burley tobacco.

CFI is a listed company which manufacture, sell fresh produce, and also manufactures stock feed. They offer products and services for animal health, operate wheat and maize mills. Apart from that, they develop and manage real estate in Zimbabwe.

According to Reuters Dairiboard Holdings Limited manufactures and market liquid milk, food, and beverage products. They are also the largest dairy company in Zimbabwe and export their products to Zambia, South Africa, Mozambique, Botswana, and Malawi.

Hippo Valley Estates Limited grow and mill sugar cane in Zimbabwe are also on the list. They do fishery, game hunting, citrus farming, and livestock production. SeedCo Limited produce and market certified crop seeds in Zimbabwe. They also supply hybrid maize seed, soya bean, wheat, barley, groundnut, and sorghum seed to farmers.

Tanganda Tea Company was unbundled from Meikles limited and listed on ZSE on January 3, 2022. They are also the largest producer, packer, and tea distributor in Zimbabwe. Tanganda’s agriculture division based in Chipinge, has Five estates, while they have an out-grower tea farmers scheme covering 1000 hectares of land.

According to African Financials,  Zimplow manufactures and markets diverse products for the agricultural, mining, and construction sectors. The farming division consists of three business units, Mealie Brand, Afritrac, and Farmec. These units manufacture animal-drawn equipment and spare parts for tractors and other agricultural equipment.

The ETF index constituents are as follows:

Table showing constituents of the ZSE ETF index. All in effect on April 1, 2022. [Photo/ ZSE]

According to an article published by the ETF STRATEGY on January 12, 2021, the Old Mutual Zimbabwe ZSE Top 10 ETF tracks the ZSE Top 10 index, which consists of the largest ten companies listed on the local bourse. Investable market capitalization ranks the companies. The ZSE Top 10 index is also an underlying benchmarked index.

The Morgan and Co Multi-Sector ETF is an actively managed ETF listed on January 3, 2022. The  fund managers pick the constituents with the help of contracted TN management.

Lastly, the ETF index also tracks the performance of Datvest Modified Consumer Staples ETF,listed on the local bourse on March 3, 2022. It tracks how the ZSE Modified Consumer Staples index. The ETF is also rebalanced every quarter.

Performance

Meanwhile, according to an article by The Herald published on February 14, 2022, the local bourse outperformed all the sub-Saharan stock exchanges in percentage investment returns, achieving a first-place ranking. ZSE was also top on the list of SADC exchanges after getting153.3 percent in terms of dollar returns. Further, returns on the ZSE were ahead of inflation for the year 2021. Inflation closed out the year at 60,7 percent. The all-share index realized a 310,51 percent gain in the year to close at 10 822,3649. The ZSE Turnover rose from $17,3 billion in 2020 to close at $65,2 billion in 2021. This indicates a 276,80 percent growth. This is evidence that the budding bourse is still an investable platform.

Read: https://theexchange.africa/business/unpacking-the-tanganda-tea-company-in-zimbabwe/

 

Albert is a Chemical Technologist and Author. He is passionate about mining, stock market investing, Fintech and Edutech.

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