The Sunday Mail
Enacy Mapakame
Business Reporter
THE Zimbabwe Stock Exchange (ZSE) traded in negative territory last week as the market succumbed to profit taking in selected stocks by investors.
ZSE has been the third worst performer in the region on a year-to-date (YTD) basis, with neighbouring Zambia, which has dropped 13,4 percent YTD on lower copper prices, leading the bears.
Profit taking by investors follows a month-and-half rally since the beginning of the second quarter.
Analysts say the market, to some extent, has been unnerved by anxieties tied to the proposed introduction of bond notes.
“The move has faced a lot of resistance across the economy, with agents accusing the local authorities of trying to introduce a local currency while avoiding to name the same as such.
“With an economy that has ailing industries and is largely import dependent, it is generally accepted that the country is not in a place to have a local currency as there lacks the supporting structures for a local currency,” said EFE Securities.
However, Reserve Bank of Zimbabwe (RBZ) argues that bond notes will be introduced as a facility to support exporters.
The US dollar, which is used as a reserve currency globally and has evolved as a major unit of exchange on the local market, has attracted unwanted interest from unscrupulous traders.
In the week to Wednesday, the mainstream industrial index had gained a marginal 0,04 points to 104,74 points; but not enough to offset the 0,08 points lost in previous trading.
The mining index was flat at 25,54 points after all its four counters – Bindura, Falgold, Hwange and RioZim – were steady at US1,2c, US0,5c, US3c and US16,10c respectively.
Delta, the country’s biggest stock by market capitalisation; rose 0,04 percent to US71c in Tuesday’s trade while Econet recorded no trades.
The telecoms giant, however, inched up 0,09 percent to close Wednesday trades at US23c as the company reported 42,7 percent decline in profit to $40,2 million for the year ended February 29,2016; on the back of a dearth in voice revenue.
Total revenue for the year was 14,1 percent weaker at $641 million compared to $746,2 million recorded in the prior year.
However, Ecocash, the mobile money business, and broadband, increased their contribution to offset a further decline in margins.
Other gains were recorded in Fidelity, which rose 6,8 percent to close at US11c, while Star Africa gained 1,2 percent US0,85c.
Property concern Pearl Properties dropped 9,1 percent to US2c after reporting rental income in the four months to April fell 5,7 percent on declining occupancies.
The company told an annual general meeting that total occupancies fell 6,14 percent as tenants seek value, reflective of the challenging economic environment.
Equity Axis, a local financial news hub and equities analysts, say weaknesses in the market are likely to remain for as long as it remains illiquid.
“We remain pessimistic about the outlook although we see value in most stocks on the ZSE for the value investor with a long term view as most of the counters are undervalued,” said Equity Axis.
Five other regional stocks also tumbled during the month of May.
The Nairobi Securities Exchange eased 0,9 percent to close at 3 827,80 points as Kenya’s inflation dropped to a 35 months low of 5 percent.
In Nigeria, shares softened 4,3 percent to 27 671 points, while the largest exchange, Johannesburg Securities Exchange, slipped 1,4 percent after the South African government approved beverages giant SAB Miller takeover.
World’s largest brewer Anheuser-Busch InBev gained conditional approval from South African anti-trust regulators for its $100 billion plus acquisition of SAB Miller on condition that local employees would not be laid off as a result of the deal.
