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Zim bourse loses $1.7bn in value

Harare - The Zimbabwe Stock Exchange lost more than $1.7bn in value for the 12 months period ended 31 August 2015.

The bourse’s market capitalisation stood at $5.2bn in August 2014 but has been in free fall since then and is now valued at $3.5bn, a 32.69% decline.

Activity on the exchange has been subdued since the beginning of the year with total turnover of $172m for the eight months to August, now down 47.23% from $326m that had been traded in the comparative prior year.

By the end of August 2015, the ZSE’s main industrial index had lost 16.81% to 135.53 points since the beginning of the year.

Analysts said the drop in value is to be expected as most big cap companies are struggling to sell their products amid the continued decline in disposable incomes.

Big companies such as SABMiller-owned Delta and telecoms company Econet have already announced plans to streamline operations, a move seen by analysts as an indication of the tough trading conditions gripping the country.

“Most companies are either retrenching or changing their business models in an effort to sustain operations,” said one analyst.

READ: Zim to amend labour laws as economy bleeds jobs

The country’s biggest grocery retailer, OK Zimbabwe is one such company, with CE Willard Zireva telling analysts in May this year that the company was adjusting its business operational model.
 
“In response to changes in the operating environment, we are going to convert some of our conventional stores into value supermarkets," said Zireva.

Other listed companies are also demanding that their suppliers reduce prices by between 15% to 20%.

Econet Wireless Zimbabwe asked for a 15% price reduction from its suppliers and has since realised cost savings of up to $70m.

FBCH has also followed the move and has since asked its own suppliers to reduce prices by at least 20%.

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