With June trading month at an end, investors and stakeholders will look back at a month that saw the rebounding of equities and a continued slump in bond performance.
Equities Performance
“In the week ended 28th June 2019, a total of 1,004,295 shares were transacted in 55 trades, yielding a market turnover of K1,341,647”, according to the Lusaka Securities and Exchange weekly report published Friday 28th June 2019. “Share price losses of K0.49, K0.10, K0.09 and K0.25 were recorded in AEL Zambia, BAT Zambia, Standard Chartered Bank and Zambian Breweries Plc respectively while BATA recorded a gain of K0.50. Trading activity was also recoded in Airtel, CEC Zambia, Lafarge, Zambeef, Zamefa and CCAF on the qouted tier”.
The LuSE All Share Index (LASI) closed the week and month of June 2019 at 4,564.78 points. The market closed on a capitalization of K57,8 billion including Shoprite Holdings and K23,5 billion excluding Shoprite Holdings.
Over the last 6 months, the LUSE All Share index has risen to a high of 5939.24 points and a low of 4563.04 points. The peak was experienced in mid-February with the trough being the currently situation the index is currently experiencing.
Bond Market Performance
During the week, bonds of total face value of K31,552,000 were transacted in 16 trades, yielding a market value sales of K20,496,000. Week 4 saw a sharp increase in the number of bond trades.
Weekly Diary
Monday 24th
- The trading week opened with 7 trades recorded on the day
- 113,032 shares were transacted, resulting in a market turnover of K148,366.
- A share price gain of K0.50 was recorded in BATA while Copperbelt Energy Corporation recorded a loss of K0.20.
- Trading activity was also recorded in Standard Chartered Bank Limited, Zambia Breweries and Zambeef.
- The LuSE All Share Index closed at 4,563.04 points down by 1.49% from its previous close of 4,632.03 points.
- The market closed on a capitalization of K57,798,793,286 including Shoprite Holdings and K23,559,587,306 excluding Shoprite Holdings.
Tuesday 25th
- In 34 trades recorded on the day, 70,592 shares were transacted, yielding a market turnover of K200,677.
- Share price losses of K0.49, K0.10, K0.09 and K0.25 were recorded in AEL Zambia, British American Tobacco Zambia, Standard Chartered Bank Limited and Zambia Breweries respectively while Copperbelt Energy Corporation recorded a share price gain of K0.20.
- Trading activity was also recorded in Airtel and CEC Africa on the quoted tier.
- The LuSE All Share Index (LASI) closed at 4,564.78 points up by 0.04% from its previous close of 4,563.04 points.
- The market closed on a capitalization of K57 806 020 341 including Shoprite Holdings and K23 566 814 361 excluding Shoprite Holdings.
Wednesday 26th
- In mid-week trading, 4 trades recorded yesterday, 32,600 shares were transacted, resulting in a market turnover of K40,660.
- Trading activity was recorded in Copperbelt Energy Corporation and Larfarge.
- The LuSE All Share Index (LASI) maintained its previous close of 4,564.78 points as there were no price movements.
- The market remained on a capitalization of K57,806,020,341 including Shoprite Holdings and K23,566,814,361 excluding Shoprite Holdings.
Thursday 27th
- In 9 trades recorded on the day, 788,046 shares were transacted, resulting in a market turnover of K951,894.
- Trading activity was recorded in Copperbelt Energy Corporation, Lafarge, Zambia Breweries and ZAMEFA.
- The LuSE All Share Index (LASI) maintained its previous close of 4,564.78 points as there were no price movements.
- The market remained on a capitalization of K57 806 020 341 including Shoprite Holdings and K23 566 814 361 excluding Shoprite Holdings.
Friday 28th
- In the last trading day of June 2019, 1 trade was recorded in Lafarge on Friday, 25 shares were transacted, resulting in a market turnover of K49.
- The LuSE All Share Index (LASI) maintained its previous close of 4,564.78 points as there were no price movements.
- The market remained on a capitalization of K57,806,020,341 including Shoprite Holdings and K23,566,814,361 excluding Shoprite Holdings.
Financial Insight Analysis
After four months of trading that appear to show the LuSE was a shadow of itself when compared to January’s 2019 performance, June recorded a surge in equities turnover and volume traded. This makes the coldest month the second best trading month of the year thus far. Although June turnover was 65% of January sales, the number of shares traded was 4% more in comparison.
However, the improved performance was overshadowed by the 20.26% slump in the all share index. Global indexes have seen erosion of value over the last 6 months.
The Bond market almost mirrored its performance in June. Sales of domestic fixed income assets have struggled to cross the K500 million mark since April of 2019. There has also been a sharp dip in the number of trades of bonds over the last month.
A review of quality of equities traded in the final week of June provides some interesting insight. The chart below pits closing share price with the price to earnings ratio. It is clear which securities are currently overpriced.
Relative earnings analysis is the most common way to identify an overvalued stock. Due to lack of peers for some companies on LuSE, investors are left with no choice at times to compare oranges with apples. Fundamentally incorrect, this method does yield challenges as the economics of companies differ. However, based on recently announced results from the company, companies with sharp peaks on the chart are indicative of overpriced equities.