Over the last couple months, we have analyzed the annual reports of the 23 companies on LuSE. We have demystified some of the jargon that comes with the financial statements. We now believe our astute readers are now ready for the next level of analysis of Zambia Premier Companies.
In our first edition, we discuss issued shares and market capitalization. The former is a piece of the company that gives the owner voting rights. The latter is the value of a company that is traded on the stock market, calculated by multiplying the total number of shares by the present share price.
LuSE and a number of the authorized stockbrokers publish the daily stock prices on their websites and in some of the local newspapers. However, some may note that the share price movement is not as frequent as say stock listed on the London Stock Exchange or NYSE. From our observation, the movement of shares on LuSE is less attributed to forces that would typically rattle external stock markets. We believe this is highly attributed to information asymmetry and liquidity in the market. Fizambia.com’s mission is to address the former whilst Bank of Zambia and the Ministry of Finance are addressing the latter.
The distribution of wealth on our stock market has an interesting profile. Of the 5 lowest shares in issue by a company on LuSE, AEL Zambia (Second lowest number of shares in issue) has the highest market capitalization amongst them. With a market cap slightly north of USD 30m, the second highest comes in at approximately USD 15m as at this week.
On the top end of the heap, another story appears to be told. With market caps over USD 100m, three companies dominate with the most number of shares in issue. Standard Chartered Bank is at the top of the pile with a USD 333m market cap. What is interesting is that the top three companies all belong to one of two industries with different fortunes. Standard Chartered Bank and ZANACO are in Banking and CEC is in Energy.