The Sunday Mail
Enacy Mapakame
THE stock market plunged 15 percent in the first three months of 2016 despite reassuring company data headlined by strong bank performances.
The mainstream industrial index lost 17 points to close March at 97,61 from January’s opening 114,85 points. The mining index slipped 4,47 points to 19,53 points by the end of the quarter.
But turnover in March rose 4,4 percent to US$16,4 million as average daily trades stood at US$782 430.
Total market capitalisation, including Econet’s Class A shares, on the Zimbabwe Stock Exchange ended the quarter at US$2,81 billion.
Although 2015 financials show softening revenues for companies, they also indicate growing profits. The average growth rate for the 30 reporting companies was 1,6 percent.
Banks had combined revenue growth of 9,7 percent.
“The banking sector surprised on the upside,” said IH Securities in a recent report.
Total deposits were 10,7 percent stronger at US$2,7 billion and non-performing loans declined across the board on the back of interventions by the Zimbabwe Asset Management Company to assume toxic debts.
Market watchers say industrial companies were boosted by tighter cost control at a time of sharp liquidity constraints and low consumer spending.
“The reporting companies themselves did not disappoint with most defying the odds to post much improved and promising numbers on the profitability lines despite revenues falling on the back of the aforementioned deflationary pressures.
“Clearly the Zimbabwean companies have been adapting to the environment to survive the challenging macroeconomic tide.
“Zimbabwe’s policy issues have long been cited as a key hindrance to progress and it appears the Ides of March were yet again set to come true as the Indigenisation Ministry ratcheted pressure on compliance with the contentious empowerment regulations,” said EFE Securities.
Most companies employed cost-cutting measures to fend off headwinds.
The end of the first quarter also coincided with the opening of the 2016 tobacco season on March 30, which is expected to inject some liquidity into the market.
Encouragingly, opening prices for the golden leaf at US$4,50 per kg were 29 percent higher than the previous season’s opening price of US$3,50.
IH Securities forecasts that blue-chip counters such as Delta, National Foods and CBZ Holdings will weather the storm in the outlook period.
Beverages-maker Delta’s share price is projected to rise from USc57 to US$1, while agro-processing concern National Foods is expected to reach US$2,64 despite challenges posed by the El Nino-induced drought.
“We believe it is oversold at current levels. The maize division generally performs better in seasons where national agriculture output is low, therefore we expect continued growth in this segment to FY16,” added IH Securities.
The share price of the country’s largest financial institution by both assets and deposits CBZ Holdings is expected to close the 2016 financial year at USc23 on the back of efforts to diversify income streams.
On a month-on-month basis, the industrial index fell 1,9 percent to 97,61 points on the back of 5,59 percent loss in cigarette manufacturer British American Tobacco.
The mining index rose 2,04 percent to 19,53 points after a 5,26 percent gain by Bindura Nickel Corporation.
Heavyweights Delta, Innscor and Econet were the biggest contributors to total value as investors went for quality.
Delta contributed 38 percent of total value while Innscor and Econet contributed 21 percent and 15 percent in that order.
Total volume traded was up 1,82 percent to 97,6 million shares.
Top gains for the month were seen in Zimre, which rose 44 percent; followed by Star Africa, which spiked 25 percent.
Leading the shakers was cables manufacturer Cafca, which succumbed 43 percent after issuing a loss warning to investors at their AGM earlier in March.
Cement manufacturer Lafarge followed with a 22,86 percent decline to USc27, while Masimba and Proplastics fell 22,2 percent and 21 percent respectively.
