Market correction sets in

Kudzanai Sharara
Assistant Business Editor
The Zimbabwe Stock Exchange continued with its bearish start to the year with all indices, including two newly introduced ones, closing the first month of the year in the negative territory.

By the close of trading for the month of January 2018, the ZSE’s main industrial Index had weakened by 8,31 percent to 333,02 as market correction sets in.
The other three indices also mirrored the same performance, closing in red for the period under review.

The Mining Index, though it has closed unchanged for the better part of the month, was also negative after losing 8,41 percent to 142,40.

The newly introduced indices also closed weak with the ZSE All Share Index losing 8,68 percent while the ZSE Top Ten Index was the biggest loser among the Indices after it lost 9,57 percent.

As reflected by the Top Ten Index, the market’s heavyweights counters where among the top fallers with Econet weakening the most after it lost 24,04 percent.

The counter was one of the top performers last year, and elements of price correction cannot be ruled out.

The counter is however, close to its fair valuation as current PE of close to 26 times is slightly above that of Kenya’s Safaricom at 24,38 times.

Innscor is also another that has significantly weakened having lost 19,75 percent as at end of January.

Its sister companies Padenga, Simbisa and National Foods, also in the Top Ten Index, have recorded losses of 12,26 percent, 15,42 percent and 7,7 percent respectively.

The losses, with the exception of National Foods, are above the Top Ten Index’s average of 9,57 percent.

Financial services group CBZ dropped 33,33 percent to 10 cents. Fellow banking institution Barclays is also among the top five fallers having lost 25 percent so far in the year to 4,5 cents as it goes through its transformation in terms of change of ownership from Barclays Plc to FMB Zimbabwe, a unit of FMB Malawi.

Dual listed Old Mutual which dominated headlines in 2017, as it traded with a huge premium to the JSE and LSE prices is also among the fallers down 5,77 percent to 520,17 cents.

As at close of January trades, Old Mutual shares on the ZSE were trading at a premium above 50 percent on both the JSE and LSE.

In total, 28 counters closed weaker in the first month of 2018 while 10 were positive. The remaining counters numbering 22 closed unchanged.

TSL, the top riser since the start of the year, remained on poll position, putting on 22,11 percent.

Last week the company reported its results for the year to October 31 2017, showing a 7 percent growth in revenue on the back of a strong agricultural season.

Other notable counters to record gains were Meikles, Edgars, Cafca and Delta.

Delta, up 3,75 percent, has been recording steady gains since releasing its trading update for the 3rd quarter to December 2017.

For the reported quarter, Group revenue increased by 24 percent for the quarter, the best performance since 2014.

The beverages maker also declared a second interim dividend of 2,25 cents per share payable or $27,9 million.

While share prices were coming off, activity has been healthy with more than $34,7 million having been invested. This is the biggest January turnover since 2015. Last year, January turnover amounted to $8,5 million.