Zambia's Capital Market Update - 17th February, 2024

In an extraordinary display of resilience and growth, Zambia's capital market has concluded the last quarter of 2023 on a high note, with the LuSE all-share index's capitalization reaching an impressive ZMW 94.3 billion. 

Source: Lusaka Securities Exchange(LuSE)

Despite facing tougher market conditions, including rising interest and inflation rates and a depreciating currency, the market has shown unparalleled strength, closing out the year with a significant 15.8% increase in the LuSE share index increasing from K 9,343.98 to K 10,828 over quarter 4, building on the momentum from quarter 3's remarkable 13% growth. This final quarter surge propelled the overall return for the year to 47.4%, a figure that stands out even more when compared to other exchanges in the region.

Quarterly Top Performers

Among the top gainers, Zambia Sugar led the pack with an astonishing 94.6% rise, buoyed by a 14% increase in revenues due to higher selling prices and export sales. Real Estate Investment Zambia and BATA also posted commendable gains, with increases of 16.1% and 15.4%, respectively. These performances underscore the robustness and potential of Zambia's capital market, even in challenging economic landscapes.

Source: Lusaka Securities Exchange(LuSE)

Recent Developments 

A pivotal development that captured the market's attention was the discovery of a significant copper deposit by Kobold Metals, a California-based company backed by high-profile investors Bill Gates and Jeff Bezos, discovers significant copper deposit in Zambia, known as Mingomba project, the venture is expected to rival the Kakula complex in capacity, which last year produced 400,000 metric tons of copper. With the global demand for copper on the rise, driven by its essential role in the manufacturing of electric vehicle components and digital products, the price of copper is anticipated to surge to around $9,500 per metric ton from its current position of just above $8,000.

Sustainability 

Sustainability concerns in the mining sector, particularly the emphasis on renewable energy use in production, have also come to the forefront. These concerns will be addressed in more detail in subsequent updates, highlighting the sector's move towards more sustainable and environmentally friendly practices.

Stocks to Watch 

Looking ahead, several stocks are poised to capture investor interest. Notably, Zambia's first green bond issued by Copperbelt Energy Company (CEC) through subsidiary CEC Renewables aims to raise $200 million for investment in the development and production of renewable energy. This initiative, along with the Arab investors International Resource Holdings' $1.1 billion investment in the Mopani mine, signifies a bright future for Zambia's capital market. These investments are expected to boost copper production, increase foreign exchange inflows, improve liquidity, and stabilize the currency, thereby fostering further market growth.

Moreover, Zambeef's announcement of a $100 million investment in Impong Farms, with plans to more than double their grain production, particularly wheat, to 150,000 tons per annum, is a development worth watching. Although announced in 2022, the full impact of this investment remains to be seen and could significantly influence the market in the coming months.