Stock exchange holds fort

Five years ago, the stock market would have gone haywire by now, as apocalyptic predictions of a continuing Mr Robert Mugabe-led economy spooked many investors.

Ahead of the 2013 harmonised elections, stocks rose sharply with the mainstream Industrials Index reaching a record 231 level around end of July that year.

And then there was a blood bath soon after the election, which resulted in the Industrials Index hitting below the 100 re-base level.

If the 2013 trend was to repeat itself, with the end of July polls knocking on the door, share prices on the Zimbabwe Stock Exchange (ZSE) should have hit the roof by now.

It hasn’t happened like that yet, if it’s going to happen at all.

After a strong rally not so many months ago, the market has somewhat tapered off in recent weeks, as investors ponder the possible outcomes of Zimbabwe’s first plebiscite without former president Mr Mugabe.

The ZSE — a useful gauge of the state of Zimbabwe’s economic and political health, dropped in June, with the market’s total value falling 4 percent to $10,7 billion, dragged by declines in blue — chip beverage, telecoms and consumer stocks.

Stocks have not rocked as they did five years ago for a number of reasons.

One of those is that the forecast for marked and sustainable economic recovery post-election looks real now more than ever before.

Some of the economic problems from 2013 such as foreign currency shortages haven’t changed much, but the politics has. There is more hope, more foreign direct investment (FDI) commitments, less isolation and a bit more consistency in Government policy.

Government is actively focused on normalising relations with the West to mobilise FDI and unlocking external lines of credit.

Brokerage firm — IH Securities are of the view that despite all efforts to build good rapport, administering free, fair and credible elections remain imperative for relations with Western entities to be mended.

President Mnangagwa has emphasised on the need for a free and fair non-violence election. International observer missions are also in the country to observe the elections.

Market experts say all these factors will combine to drive equities higher for the remainder of this year.

“These early signals bode well for a peaceful and democratic election,” said IH Securities.

Meanwhile, total volume of shares that traded in the month of June jumped 87 percent to 234 million albeit the primary indices closing the month in the red.

Overall, the market weakened by 5,78 percent to close the month with a total capitalisation of $9,79 billion.

The All Share Index dropped 5,72 percent to 102,10 level while the Top 10 Index also shed 7,10 to 103,31 level on losses in the market’s heavy weights.

The Industrials Index shed 5,20 percent to 342,79 level, weighed down by losses across board.

The Mining Index gained 6,42 percent to 161,28 on the back of a 10,37 percent gain in RioZim.

Monthly turnover however increased 24 percent to $75,16 million with average daily trades of $3,58 million realised during the month.

The market’s usual major value drivers, Econet, Delta and Old Mutual, were the major contributors to total value traded in the month.

Econet account for 19 percent of the month’s value while Old Mutual and Delta accounted for 18 percent and 15 percent respectively. Seedco and Proplastic also made it into the top five monthly value drivers after contributing 10,95 percent and 5,81 percent respectively.

Losses in the market were recorded in Old Mutual, which retreated 35,29 to $4,85, followed by Willdale which lost 33 percent of value.

Seedco, PPC and Delta all retreated 26 percent to $2,02, 20 percent to $1,20 and 13 percent to $1,80 respectively.

Further losses were offset by gains in Unifreight which added 44 percent of value to 2,52 cents while Edgars was 25 percent up to 6,5 cents. Fidelity Life and African Sun were each up by 20 percent 12 cents and 7,2 cents respectively.

The country’s only listed media group, Zimpapers, added 18 percent of value to 1,33 cents.

Consumer stock, OK Zimbabwe, is expected to enjoy good times as use of plastic money continues while good performance in primary sectors such as agriculture and mining should add to the momentum.

This should also work well for financial services group, NMB.

NMB’s strategy for FY18 will be to continue rolling out mobile point-of-sale machines to the formal and informal sectors following their launch in FY17.

“Hence, we anticipate a performance uplift from the cheaper POS devices as the bank aims to drive earnings through fee income driven by electronic payments,” said IH.

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