The Sunday Mail
THE Zimbabwe Stock Exchange plunged further in January, with indices crashing over 10 percent in record low turnover in a year.
Heavyweight industrial stocks ended sharply lower, pushing the key index down 10 percent to 103,04 points in the month, its lowest level in six years.
The mining index slumped 18 percent to 19,53 after nickel producer Bindura tumbled 35 percent.
ZSE turnover fell 30 percent to US$11,4 million, a 12-month low, as foreign investors – accounting for 60 percent of all trades on the local exchange – sold off US$8,9 million shares worth.
That compares with just US$5,4 million of purchases, meaning US$3,5 million left an already illiquid market last month.
With a tough economy and weak demand combining to hurt company earnings, investors are no longer looking for a reason to sell, analysts say.
Of particular concern is that revenues at Delta Corporation – Zimbabwe’s largest company by market value – fell five percent in the quarter to December 2015.
“Blighting the market’s allure has been the unabating economic challenges that have created a hostile operating environment for the constituent companies on the bourse, dampening the outlook and interest in local equities,” stockbrokers EFE Securities said in a monthly review.
Government expects the economy to grow 2,7 percent this year from 1,5 percent in 2015.
Experts contend the El Nino-induced drought coupled with falling global commodities prices will slow growth.
Industrials have fallen from a record high 233 points in August 2013, beginning a descent that has brought the index to within just three points of its rebased level at dollarisation in 2009.
In January, the number of shares traded fell 66 percent to 62,9 million shares with 21 of the listed 58 counters declining.
Heavyweight counters fell fastest. Industrial conglomerate Innscor Africa Ltd tanked 30 percent to USc20 and Delta Corporation lost 25 percent to USc53.
Old Mutual and OK Zimbabwe fell 16 and 20 percent, respectively. Other losses were recorded in Willdale and Medtech that fell 50 percent and 25 percent respectively.
“The market’s position in January was further weakened by a slowdown in corporate activity with very little information coming from the listed companies to inspire activity,” EFE said.
Deflationary pressures were also seen haunting the stock market in January making it one of the worst month-on-month movements, according to EFE Securities.
Regional currencies, particularly the South African rand, maintained their weaknesses against the US dollar.
In the same month, Innscor divested from six Spar stores before announcing the unbundling and separate listing of its specialty retail and distribution arm.
The highlight of the market’s corporate calendar was the listing of Getbucks Financial Services though the microfinance institution had not traded by the end of January.
Gains were recorded in telecoms giant Econet, that closed the month eight percent firmer, starafricacorporation, CFI and Turnall, which rose 33 percent, 21 percent and 10 percent respectively.
“There are significant downsides to Government forecasts, emanating from adverse weather patterns, as the rainy season started late and weakening commodity prices, in particular metals, likely to result in the economy underperforming,” said brokerage firm IH Securities.
“Inflation is expected to stay around zero, mainly as a result of the appreciation of the USD amidst the increase in interest rates.
“As a result, we anticipate corporate earnings will remain relatively flat in 2016 as it is in our view that corporate have largely adjusted to this new ‘normal’ in the macroeconomic environment which effectively started post-2013 elections.”
