Econet InfraCo’s market capitalisation has fallen below US$600 million after the counter lost 12.47% in Tuesday’s trading, extending a decline that has erased more than 40% of its value since listing on the Victoria Falls Stock Exchange (VFEX) in April at an implied valuation of about US$1 billion.

The latest decline leaves Econet InfraCo with a market capitalisation of US$594.54 million, making it the fourth-largest equity counter on VFEX and accounting for 7.3% of the exchange’s total equity market capitalisation, according to market data as at September 21.

The concentration of value on the exchange is pronounced, with the top five counters accounting for 86.7% of the market capitalisation of the 16 listed equities, while the top 10 account for 98.3%.

Old Mutual Limited alone has a market capitalisation of US$4.08 billion, representing 50% of the exchange’s equity market. Padenga accounts for US$1.13 billion, or 13.8%, while Innscor Africa contributes US$863.83 million, or 10.6%.

Econet InfraCo’s US$594.54 million places it ahead of Simbisa, at US$395.33 million, First Capital Bank, at US$347.33 million, and West Prop Holdings, at US$300 million.

The figures also illustrate how changes in the treatment of counters with shares issued both locally and internationally can materially alter the headline size of the exchange without necessarily producing a corresponding increase in liquidity or the amount of capital available to Zimbabwean investors.

Market analyst Sylvester Mupanduki said the change in the market capitalisation calculation had effectively altered the “ruler” used to measure the exchange.

“A ruler measures things. If a ruler is re-marked so that a two-metre table reads four metres, the table has not grown. Only the ruler has changed,” Mupanduki said.

He cited Old Mutual as an example, saying the company closed at US$0.8028 on August 13 with a market capitalisation of US$50.96 million when calculated using roughly 65 million shares on the Zimbabwe register.

On August 14, Old Mutual closed at US$0.8385, but its reported market capitalisation jumped to US$3.77 billion after the calculation was applied to its 4.498 billion shares issued globally.

Mupanduki said the share price had increased by 4.45%, while the reported market capitalisation increased by about 7,300%.

“As a result, VFEX's total market cap went from US$4.08 billion to US$7.81 billion in one day, and Old Mutual's re-measurement accounted for US$3.72 billion of that US$3.73 billion jump,” he said.

He said VFEX had since reached a market capitalisation of US$8.23 billion, with Old Mutual alone accounting for US$4.08 billion, or 49.5% of the exchange.

“Same company. A price up 12.86% since 13 August, against a market cap up +7,800%. Same shares available to Zimbabwean investors,” Mupanduki said.

“The market did not grow. The ruler that measures the market did.”

Mupanduki said the revised methodology was useful for reflecting the global size of companies such as Old Mutual, but argued that the resulting increase in reported market capitalisation should not be treated as equivalent to an expansion in market depth.

“The reform is fair for showing Old Mutual's true global size. But it adds no investors, no trading and no capital. A larger reported market is not a deeper market,” he said.

For Econet InfraCo, however, the decline is a direct movement in the quoted value of the listed counter. Its fall from an April valuation of about US$1 billion to US$594.54 million represents a reduction of more than US$400 million in market capitalisation in less than six months, placing the counter below the US$600 million threshold.

The contrasting movements highlight two different components of VFEX's headline market size: changes in the underlying prices of listed shares and changes in the methodology used to calculate the value of counters with internationally issued shares.

At the same time, the September 21 concentration figures show that the exchange's headline US$8 billion-plus equity valuation remains dominated by a small number of counters, with Old Mutual, Padenga, Innscor Africa, Econet InfraCo and Simbisa together accounting for 86.7% of the 16-counter market.