ZSE: Rags to riches and back to rags

21 Dec, 2014 - 00:12 0 Views
ZSE: Rags to riches and back to rags

The Sunday Mail

The Zimbabwe Stock Exchange ends the year as one of Africa’s worst performing bourses with year-to-date declines on the key industrial index nearing 20 percent on sustained poor corporate and economic output.

With only a week before year-end, any hopes for immediate recovery are all but dashed, leaving many investors with sore losses as nearly US$600 million of value has been knocked off the stock market.

Last year, the ZSE was among Africa’s top-five markets.

But by close of trade last Wednesday, industrials had lost 17,9 percent to 165,95 points since January 3, down 18,7 percent from its 52-week high of 204,17 points.

At the midweek’s closing, the main index was just a few points shy of its year-on-year low of 163,85 points on the back of persistent declines in heavyweight counters, low inflation, tight liquidity and weak economic activity.

However, thanks to Bindura, the mining index of four counters has shrugged off the bears seen during most of the first half, rising nearly 45 percent on a year-to-date basis to close at 64,51 points on Wednesday.

Over the year, mining touched a high of 105,13 points and a 27,97-point low.

Most of the continent’s major markets are faring badly, however.

According to the African Indices performance update for November, Kenyan stocks rose 19,48 percent since January 2014 while those in Nigeria dropped 16,4 percent and South Africa rose 7,9 percent.

The Botswana Stock Exchange foreign index has remained flat while Mauritian shares have risen only 0,02 percent. The Lusaka Stock Exchange gained 16 percent on year-to-date basis.

During the year, more than half of the 62 counters on the local bourse experienced declines in total trades compared to the same period last year.

Notably, big cap counters Delta and Econet’s total trades fell 28 percent and 30 percent, respectively.

Innscor, CBZ Holdings and OK Zimbabwe also declined in total trades by 36 percent, 30 percent and 27 percent in that order.

However, trades for Seedco and ABCH improved significantly by 674 percent and 1 264 percent, respectively.

Harare stock brokers Lynton-Edwards Securities said the stock market will maintain sideways movement.

“Nothing much seem to have changed, with the Government still having a lot to do to make the country’s business environment investor friendly, especially in areas such as the high cost and ease of doing business,” said LES in their latest equities report.

Another brokerage firm, MMC Capital, forecasts low trade volumes on the stock market could likely continue on weak investor sentiments.

On the bright side, US$10 million worth of bond coins released by the central bank last Thursday are expected to improve the liquidity situation, which may boost stocks performance.

“These bond coins are being introduced to support the multiple currency through provision of change especially for the US dollar notes and support (South African) rand coins that are circulating in the local economy, thereby improving the pricing of products and the ease of transaction especially for retailers,” said MMC Capital.

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