The gold that under-fire Zimbabwe Miners’ Federation (ZMF) boss Henrietta Rushwaya allegedly tried to smuggle out of the country before running into an airport security trap about three weeks ago was enough to purchase all stocks in two listed counters, a stock market report says.
Rushwaya, who has since been suspended by the ZMF, is battling to clear her name in Zimbabwean courts.
The former football boss was arrested at the Robert Gabriel Mugabe International Airport as she tried to fly into Dubai with six kilogrammes of gold stuffed in her handbag.
In a Zimbabwe Stock Exchange (ZSE) commentary covering October, researchers at FBC Securities went all out to make a breakdown of the extent to which the country would have lost had the miners’ boss flown out with the processed gold.
FBC Securities estimated the contraband at about US$350 000.
In Zimbabwean dollars, US$350 000 translated to about $28,3 million during the week that she was arrested.
This figure is way above the combined value of listed stocks in logistics firm Unifreight and struggling engineering outfit Zeco Holdings, FBC Securities said.
If the gold loot that is now linked to powerful figures in the Zimbabwean political space had been sold to invest in these firms, the funding would be enough to improve their operations and benefit the economy.
Zeco is largely a penny stock, but it can still support hundreds of families if it is funded to return to full-scale operations.
FBC Securities used the value of the gold loot to demonstrate how trading had declined on the ZSE, where the two firms are quoted.
The paper said the ZSE trended from being bearish to flat during October, as it struggled to find direction under Zimbabwe’s volatile economic terrain.
“The 6kg of gold that Henrietta Rushwaya tried to smuggle is worth around US$350 000,” FBC Securities said in the report dated November 3, 2020.
“Converted to RTGS using the auction rate of 81,3531, (it is worth) $28,3 million.
“This money is enough to acquire all listed shares of Unifreight and Zeco Holdings, which are currently valued at $13,8 million and $92 700 respectively.
“The above 6kg of gold scenario clearly demonstrates how ZSE is grossly undervalued and we maintain a positive buy tone,” FBC Securities said.
“In the past two weeks, the Zimbabwe Stock Exchange has been flat to bearish indicating a market struggling for direction.
“Macroeconomic indications are currently inclined to a falling market owing to thin liquidity, stable exchange rate movements and inflation dynamics. Daily volumes have been generally low and cumulative turnovers were being pushed by structured trades… ,” FBC Securities added.
In October, total turnover at the ZSE was valued at $987 million, the report said.
This was far below the $4,64 billion attained in September.
Average daily turnover was around $45 million during the review period.
FBC Securities said October was generally a normal month without significant outliers.
All major indices posted losses, with the All Share, Top 10 and Mining Indices declining by 10%, 14% and 8% respectively.
The All Share index opened the month of October in the red at 1,476.41 points after easing 0,46 points (0,03%).
Mining outfit RioZim lost $1,2500 to settle at $8,5000, Cassava Smartech fell by $0,1437 to $3,8564 while First Mutual Properties shed $0,1000 to close the day at $2,2000.
Mashonaland Holdings dropped $0, 0954 to $0,5050 and Art Corporation was $0,0692 down at $2,2308.
Trading in the positive during the month, Hippo Valley Estates gained $1,0574 to close at $15,0000, CBZ Holdings went up to $40,1748 after adding $0,2220 while National Foods was $0,2000 stronger at $50,2000. Innscor Africa rose by $0,1951 to $19,0071 and Padenga Holdings traded $0,1907 higher at $13,2000.
Counters that include Falgold, Dawn Properties, ZimRe Property Investments and the Seed Co have announced plans to de-list from the ZSE.
Already, regulators have given the greenlight for the operationalisation of Victoria Falls Stock Exchange .
Foreigners were net sellers by $267 million having sold $348 million and bought only $81 million.
The report said regardless of historical issues related to repatriation and policy inconsistency, fresh investments for relatively long positions would be worth considering on the ZSE.
It said the ZSE was grossly undervalued in US dollar terms.
The current market capitalisation in US dollar terms is around US$2 billion which is not reflective of the real net asset values of listed companies.