The Sunday Mail
Stories by Enacy Mapakame
Zimbabwean shares plunged deeper last week amid mounting deflationary and liquidity pressures as the main industrial index hit new 12-month lows after huge losses in heavyweights.
By close of trade on Thursday, the key index was down 4,52 percent or 7,80 points week-on-week to 164,79 points, its lowest level since early April 2013.
The index is down 17 percent on a year-to-date basis.
In the four-day trading week cut short by the coinciding Independence and Easter Holidays, the mining index remained unchanged at 28,28 points.
Experts say investors could be still digesting the negative inflation data released by the Zimbabwe National Statistical Agency last Tuesday.
The figures saw month-on-month inflation falling minus 0,42 percentage points in February to minus 0,91 percent in March due to low consumer demand and tight liquidity.
Economists have expressed concern that the country is entering into a deflationary spiral marked by lower consumer demand, falling prices and decreased economic activity that will choke company production and profitability.
During the review week, total Zimbabwe Stock Exchange market capitalisation fell 2,84 percent to US$4,26 billion.
Turnover stood at US$10,55 million with average daily value trading at US$2,63 million.
Of the index shares last week, big capitalised stocks, the usual market drivers, fell heaviest.
The biggest stock on the ZSE, Delta, shed 4,54 percent to close at US105 cents following its trading update which showed a decline in volumes and flat turnover for the year to March 2014.
Econet and Innscor closed lower 4,07 percent at US59 cents and 4,34 percent at US59,59 cents respectively.
ABCH was one of the week’s biggest gainers adding 62,79 percent to US70 cents as the price tracked the US82 cents per share offered by Atlas Mara, the global firm that has tabled a US$265 million takeover bid.
Other gainers were National Tyre Services (NTS) and brick company Willdale that firmed 58,82 percent and 42,86 percent in that order.
The most significant losses for the week were recorded in Cottco which was down 20 percent while TSL and Seedco fell 14,29 percent and 13,12 percent respectively.
In the first quarter, ZSE trades remained lower on the back of continued economic difficulties.
Stockbrokers Lynton Edwards said in their Investor Alert that the country’s economy continued to weaken as many companies closed shop with others retrenching or heavily downsizing.
“Consumer demand has also been on the decline amid waning disposable incomes,” said the stockbrokers.
Turnover for the 2014 first quarter was US$118 million, 1,51 percent lower than the US$120,4 million invested during the same period in 2013.
Foreign investors dominated the market contributing 67 percent of the total US$118,6 million turnover marking a slight improvement from foreign contributions of 62,7 percent last year comparative.
“Foreigners have actually increased their portfolio investments into the country, having bought shares worth US$79,4 million against US$75,6 million they bought during the same period in 2013,” said Lynton Edwards.
Big losses in the period under review were recorded in Pelhams which fell 90 percent to US0,01 cents, Cottco down 81,67 percent to US1,1 cents and Hunyani which shed 50 percent to US1 cent. Delta and BAT lost 17,91 percent to US115 cents, 8,33 percent to US1100 cents in that order.
On the other hand, Econet gained 3,53 percent to US62,12 cents and CBZ up 6,67 percent to US16 cents.
Lynton Edwards said the economic situation in Zimbabwe was fast deteriorating and needed urgent attention.
“We are now at a point where hard decisions have to be made. We believe the economy has reached a point where Government has to take radical measures in order to stimulate the economy,” said the stockbrokers.
