The Sunday Mail
THE ongoing cash crunch has sent financial shares on the Zimbabwe Stock Exchange (ZSE) tumbling, as confidence in the banking sector hits rock bottom.
In the past six weeks, Barclays Bank Zimbabwe Ltd’s shares have led the decline, crashing 18 percent to USc2,40. But it is important to note that Barclays’ shares have been trekking south since the announcement by parent company, Barclays Plc, of its intention to eventually sell off its African operations.
FBC Holdings Ltd has also plunged 4,5 percent to USc6,4.
The rest of the listed financial stocks – CBZ Holdings Ltd, NMBZ Holdings Ltd, ZB Financial Holdings Ltd and GetBucks – have barely moved, remaining stuck at USc11, USc3,8, USc3, and USc4, respectively.
Zimbabwe is grappling with paper money shortages since March 2016.
The US dollar, which is the widely used transactional currency, is in short supply and banks have introduced punitive cash withdrawal limits hovering between $50 and $300 per day.
The Bankers Association of Zimbabwe (BAZ) has been calling for withdrawal limits of $500 per week to mitigate the cash shortages.
Authorities blame the cash shortages on illicit financial outflows, which, according to the Reserve Bank of Zimbabwe (RBZ) reached US$1,8 billion last year.
Poor export performances have also contributed to the cash shortages, with country exporting just over $2,5 billion last year compared to imports of about $5,5 billion.
Fears are that the withdrawal limits will spark a run on deposits by the depositors.
Watchers say the cash crunch has dented the little confidence depositors had in the country’s banking industry.
Depositors have largely remained sceptical of the formal banking sector after losing their savings following adoption of multiple currencies in 2009.
Now, as banks face increasing pressure to cut high fees on cashless transactions to ease the liquidity crunch, analysts are concerned profits will take a serious knock.
This is despite policy interventions by monetary authorities to improve the liquidity situation, which include the planned introduction of bond notes backed by a $200 million facility from regional bank the Africa Export and Import Bank (Afreximbank).
The bond notes are not expected in circulation until October 2016.
“With heightened uncertainty (over cash shortages) the ZSE staggered to its second lowest monthly value traded since the turn of the year while breaking the market’s second quarter mini revival,” said stockbrokers EFE Securities.
In May, the mainstream industrial index broke the second quarter momentum on profit taking in selected stocks, coupled with the uncertainties on the current cash situation.
The index retreated 1,03 percent to 104,7 points extending year to date losses to 8,84 percent.
Inflows for the month stood at $6,5 million against $7,5 million in portfolio disposals for the month.
Top volumes were seen in Zimre Holdings, Zimplow and Simbisa while beverages maker Delta was the most liquid stock on the bourse accounting for 40 percent of aggregate values exchanged over the month.
Delta rose 1,43 percent to close the month at USc71 with RioZim leading the bulls of the month with a 46 percent rise to USc16.
Proplastics also rose 9 percent to USc3.
Top fallers were sugarcane grower and miller, Hippo Valley Estates, which succumbed 9 percent to USc20.
The company last week reported a net loss of $8,5 million for the year to March 2016 against prior year profit of $7,3 million on low production volumes.
Sugar production for the year slumped 11 percent to 204 000 tonnes against 228 000 tonnes in the comparable year due to a 15 percent drop sugarcane deliveries from farmers and generally poor growing conditions.
Peers, Star Africacorporation were also among the bears of the month shedding 16 percent to USc0,16.
Other declines were seen in construction allied group Turnall which retreated 8,3 percent to USc1,1 while telecoms giant Econet slumped 8,3 percent to USc22,98.
Econet reported a 42 percent decline in profit for the year ended February 29, 2006 to US$40 million on a 35 percent voice tariff reduction.
Fast moving consumer goods conglomerate Innscor Africa was another heavy cap decliner letting off 7,95 percent to USc20,25 as the group completed the unbundling of specialty retail business Axia which also listed on the bourse last month.
The less active mining index was however on a rally, enjoying a 26,69 percent upsurge to 25,54 points driven by RioZim which lead the monthly risers after gaining 46,36 percent to USc16,10. Bindura added 17,65 percent to USc1,20.
