Business - Economic Updates - Featured - November 27, 2020

Business recovery on the stock market a result of stability on the auction system: Prof. Mugano

ZIMBABWE Stock Exchange (ZSE) listed companies has experienced a recovery in business due to the stability of the Reserve Bank of Zimbabwe (RBZ) foreign exchange auction system rate, Business Mail can report.

The market- foreign exchange auction system came into effect on 23 June 2020, since its introduction the rates have become static.

Quarterly earnings reports released by some ZSE listed companies for the period to September 30, 2020, are showing growth year on year as well as compared to the previous quarter.

In the hospitality sector, leading company Rainbow Towers Group (RTG) has recorded an increase in revenue by 3% whilst performance in revenue at the Hotelier African Sun has seen a steady recovery due to the stability of the RBZ auction system and inflation.

Speaking to the Business Mail, Professor Gift Mugano said the general improvement in business in almost every company listed on the stock market owes to a stable foreign currency exchange rate.

“The stock market performance is influenced by the economy, if there is a good performance on the economy there must be also a good performance on the stock market.

For the past four months the stability and fall of inflation gave a renewed hope on the stock market as a market of restoring value,” he said.

Professor Mugano added that the RBZ auction system is a game-changer for the economy of Zimbabwe although it is not efficiently performing as expected.

“The RBZ auction system is the game-changer for the economy and it is a brilliant start which positively impacted the performance of companies on the stock market. It is likely to improve with an increased rate of the money supply which Finance and Economic Development Minister Mthuli Ncube is managing,” Prof. Mugano added.

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