Gerald Hamuyayi, Lusaka, Wednesday, 7 August 2024 – The Lusaka Securities Exchange (LuSE) has kicked off the first half of 2024 with a roar, as several stocks post remarkable gains. The surprise performer, PAMODZI, had its share price rise from K0.71 to K4.62 since January, leaving investors and analyst in disbelief at the magnificent 550% capital gain posting by the security. Apparently, the most share gain was realised in the second quarter, emanating from ASB’s mandatory offer to the minority shareholders of Pamodzi, who held a 10% stake. The offer, which opened on 22 April 2024, allowed ASB to purchase minority ordinary shares at K4.62 each. As the majority shareholder with a 90% stake, ASB acquired an additional 9.12% of the minority shares, increasing its total stake to 99.12% as shown in the “PAMODZI shareholding before and after mandatory offer” table. The share price subsequently rose to K4.62.
The LuSE All Share Index (LASI) recorded an impressive 28.13% in the first half of 2024 as bulls triumphed, signalling improved investor confidence in Zambia’s financial markets. This has largely been driven by strong performances across various sectors, particularly banking, consumer goods, and mining-related stocks. However, second quarter has been rough overall as the LASI’s growth nearly halved. The stock market returns so far surpass return on risk-free on government securities as shown in the “Government Bonds” table.
Courtesy of Bank of Zambia
The financial sector emerged as the value generation leader, with Standard Chartered Bank (SCBL) and ZANACO leading the park. SCBL more than doubled its value with a 133.33% increase, while ZANACO posted a solid 65.26% gain over the period. According to the latest banking sector financial statements, Zambia’s banking sector posted a mega K2.0 billion profit after tax in Q1 2024, amidst a crossfire of economic headwinds. These results suggest a resilient sector, excelling in diverse economic environments. The economic plagues have caught up with the banks, as evidenced by the decline of ZANACOS’s share price by 1.26%, while Standard Chartered Bank’s share price remained largely unchanged, with a minimal increase of K0.03 in the second quarter.
Consumer goods stocks also showed remarkable strength. BATA and PUMA saw their share prices surge by 63% and 59.60% respectively. The mining sector, the heartbeat of Zambia’s economy, did not disappoint. CEC and ZCCM-IH both delivered strong returns, with half-year share price increases of 41.04% and 28.57% respectively. The commissioning of the 60MW Itimpi Solar Photovoltaic Solar Power Station in the second quarter drove CEC’s growth, accounting for roughly 80% of its increase, as the firm’s renewable innovations continue to bear fruit. These gains in mining-related stocks may reflect positive sentiment and investment commitments surrounding Zambia’s copper industry and overall mining sector.
Not all was glittery, however, as ZAMBEEF and AECI pulled back from their January valuations, ebbing by 13.44% and 4.72% each. ZAMBEEF is challenged by exchange rate pressures, cost of fuels and of agricultural inputs. These pressures are exacerbated by the medium-term reliance on fuel-feed generators, which are used to mitigate the impact of prolonged power outages, exceeding twelve hours, in Zambia. In a sad development, Investrust shareholders suffered a 100% wipeout as the stock’s listing was terminated on 15 July 2024, resulting in significant losses for investors and shareholders.
Zambia’s stock market continues to demonstrate resilience and growth. With the LASI’s strong performance and several stocks posting triple-digit gains, investor optimism appears to be driving growth with momentum weakening. The Lusaka bourse has demonstrated its value preservation function, as the market’s 28% growth surpasses the latest inflation figure of 15.2% year-on-year as of June.
Courtesy of Stockbrokers Zambia
