In a tale of opposites, the final week of October 2019 showed the inverse relationship of the corporate bond market and the equity market with the latter recording its best performance of 2019 and eclipsing the bond market for the first time during the year.
Weekly Equity Market Update
In the week ended 1st November 2019, a total of 212,176 shares were transacted in 67 trades, yielding a market turnover of K240,633.
Trading activity was recorded in AIRTEL, CEC ZAMBIA, LAFARGE, REIZ, PUMA, STANDARD CHARTED BANK, ZAMBEEF, ZAMSUGAR and ZANACO. The performance during the week was the second weakest on a week by week basis with Week 1 taking the tail end of performance for October.
The LuSE All Share Index (LASI) closed at 4,312.77 points. The market remained on a capitalization of K56,756,287,458 including Shoprite Holdings and K22,517,081,478 excluding Shoprite Holdings.
Weekly Bond Market Update
During the week, bonds of total face value of K17,209,000 were transacted in 15 trade, yielding a market value sale of K13,106,760. The final week matched the opening week in terms of number of trades with a 158% surge in sales from the previous week.
Perspective
The negative correlation of the corporate bond market and equities market in Zambia is driven by the scarcity of capital and has a big influence in which market investors feel comfortable placing their investments.
Following the peak and trough of the equities and bond market, respectively, investment decisions are driven by return on capital. Despite the bond market continuing to provide investors with fixed income, Government bonds and treasury bills were the distraction in October as yields were at their highest.
Zambeef traded the most in the final week of October taking the lions share in turnover and volume of shares traded. However, of the traded securities during the week, Zambeef along with Zambia Sugar had the lowest dividend yield due to the non-payment of the reward to shareholders in as many years. Both companies have similarities in their strategic intent. Both companies are straddled with debt. Both company’s securities are below 90 ngwee per share.
The Airtel security has the highest dividend yield of the traded companies. However, it was also the most expensive at K31.50 per share. The cheapest was Zanaco at 61 ngwee per share.
Important announcements
FQM publishes Q3 financial performance
First Quantum Minerals Ltd. (“First Quantum” or “the Company”) reported comparative earnings1 of $32 million or $0.05 per share1, net loss attributable to shareholders of the Company of $73 million or $0.11 per share after now deducting depreciation and interest charges for Cobre Panama since commercial production and cash flows from operating activities of $151 million or $0.22 per share, for the three months ended September 30, 2019.
At the Board Meeting held on 23 September 2019, an Interim Dividend of 2.0 Kwacha per share for the half-year ended 30 June 2019 was declared by the Board of Directors of AEL Zambia PLC.