Harare- The ZSE has published its 2026 first quarter index composition for multiple categories including the top 10 and 15 indices. The indices are used to determine movements in a set of select counters as an aggregate against a stable base period.
From our reading of the 2026 index compositions for the top 10 counters, there are minimal changes to the face of the counters from prior periods, while the composition remains dominated by a minor fraction of just 3 counters for the top 10 index, accounting for over 70% of underlying value.
Between Q1 2025 and Q1 2026 changes in the composition point to a stock market that is not merely evolving, but structurally contracting, with fewer large, liquid counters anchoring market capitalisation.
While the headline names remain familiar, that is Delta and Econet, the underlying shifts shows declining breadth, capital erosion in select sectors, and the steady exit or downgrading of once-significant players.
In the Top 10 Index, the most notable change is the exit of Ecocash Holdings post restructuring and Hippo Valley Estates. The 2 were replaced by First Mutual Properties and Tigere Property Fund REIT.
The shift reflects on the market’s growing tilt toward property-backed and yield-oriented instruments at the expense of operating businesses. This transition highlights how inflation stability and tight liquidity have shifted investor preference away from growth narratives toward asset-backed defensiveness.
The Top 15 Index tells a similar story of narrowing opportunity. While most constituents are retained, the absence of ZB Financial Holdings and Ecocash in 2026, alongside the inclusion of African Distillers and Meikles, suggests re-ranking driven by market capitalisation compression rather than broad-based growth.
These changes are incremental and revealing in that fewer financial services names dominate the upper tiers, while property, tourism, and select consumer counters maintain relevance largely due to balance sheet resilience rather than earnings momentum.
These observations reinforce the reality that index stability is being maintained by reweighting within a shrinking pool, rather than by new entrants or organic market expansion.
Decisively, the delisting of National Tyre Services (NTS) from the broader market during the period, linked to sustained loss of formal sector demand amid SME and informal sector penetration, illustrates how economic informalisation is directly hollowing out the listed space.
One of the most consequential dynamics, however, is the continued retention of Econet Wireless Zimbabwe in the Top 10 and Top 15 indices, despite its imminent exit from the ZSE.
While Econet remains one of the largest counters by historical market capitalisation, its inclusion increasingly distorts index representativity and investability. As Econet transitions away, passive and benchmark-tracking portfolios face forced rebalancing risk, while the ZSE risks losing one of its last technology and scale anchors.
Once Econet exits, the impact is clear, index concentration will intensify, liquidity will thin further, and the dominance of a small cluster of banking, property, and consumer names will deepen.
In this light, the index changes between Q1 2025 and Q1 2026 should be read as early warning signals of a market struggling to replenish itself, increasingly reliant on defensive assets, and vulnerable to further shrinkage unless new listings, credible capital raises, and private-sector growth re-enter the equation.
How investors should read the changes
As market capitalisation becomes increasingly concentrated in a small cluster of large counters, index performance is driven by fewer stocks, reducing its usefulness as a broad proxy for market health.
In practical terms, strong index readings may reflect gains in a handful of heavyweight names rather than a general uplift across the market.
This divergence between index-level performance and the experience of the median stock has widened over the past year, particularly as delistings and capital erosion have reduced the breadth of the investable universe.
For investors, this clustering effect has important implications. Portfolios benchmarked to the main All Share Index or its subsets may appear to track the market closely, yet in reality be overexposed to a narrow group of companies, often in similar sectors such as financial services, property, or consumer staples.
This concentration increases idiosyncratic risk, as adverse developments in one or two dominant counters can disproportionately affect index performance and, by extension, benchmark-aware portfolios. The impending exit of Econet further heightens this risk, as its eventual removal will trigger index reweightings, forced selling by passive strategies, and potential short-term volatility in both the indices and affected portfolios.
More broadly, the growing prominence of clustered indices away from the broader All Share Index signals a market where relative performance matters more than headline direction. Investors relying solely on index readings risk misjudging underlying opportunity and risk.
In the current environment, portfolio outcomes are increasingly determined by stock selection, sector exposure, and balance sheet quality rather than index momentum.
As such, while index readings remain useful as directional indicators, their direct influence on portfolio performance is diminishing unless an investor is explicitly benchmarked or passively aligned. In a contracting and concentrated market, indices inform context, but fundamentals drive returns.
Equity Axis News
