The Sunday Mail
THE Zimbabwe Stock Exchange (ZSE) mainstream industrial index has fallen below the 120-point resistance level as shares continue to take a battering, uninspired by the recently published 2016 National Budget.
By the end of November, the index had crashed 10 percent or 13,28 points month-on-month to 117,55 points, it’s heaviest monthly loss so far this year.
Mining fell 5,3 percent or 1,24 points to 22,33 points during the review month on the relentless slump in global metal prices, itself a result of the slowdown in the Chinese economy.
Monthly turnover tumbled 30,4 percent to US$8,9 million. Year-to-date, stock market punters have lost more than US$1,3 billion-investments worth.
Analysts were hoping at 120 points, shares would begin to resist any further declines given that several heavyweight counters are trading at historic lows.
But by last Wednesday, the hopes had gone up in flames as industrials tumbled to 114,39 points, down nearly 30 percent since January.
With negative inflation forecasts and the continued weakening demand, it is not surprising that market watchers now see the index hitting 100 points by year-end.
However, there have not been significant profit on the ZSE this year as foreign capital — accounting for two thirds of domestic stock market investments — flies away, thereby forcing prices down.
Stockbrokers EFE Securities said the fall in equities has seen “the (main) index trudge into levels that were last seen in 2009 in the early days of dollarisation when the market was cutting its teeth into the emerging markets scene with demand being propelled by surging foreign demand.”
A fortnight ago, Finance and Economic Development Minister Patrick Chinamasa released a US$4 billion National Budget for 2016; targeting 2.7 percent economic growth spurred by increased output in mining, tourism and construction.
Annual inflation is expected to average minus 1.2 percent with consumer demand remaining under pressure.
Minister Chinamasa said, “Going into the new year, current efforts by Government to boost economic growth, including re-engagements with international financiers will lift the stock market higher.”
But with the El Nino effect set to hit agriculture — Zimbabwe’s economic lynchpin — market watchers are less optimistic.
“Though next year’s targets may be achievable, there is no certainty that we even met the 1,5 percent economic growth estimate for 2015,” economist and Zimbabwe National Chamber of Commerce chief executive, Mr Takunda Mugaga said in a telephone interview.
EFE Securities said with capital expenditure accounting for just eight percent or US$320 million of overall Government spending in 2016, there was little hope for stock market rebirth.
In November, heavyweight counters fell fastest on declining incomes.
Industrial conglomerate, Innscor Africa Holdings Ltd paced declines crashing 43 percent to US$0,34 after revenue in the year to June 2015 fell 6,5 percent from US$871 million to US$814 million on low volumes at key subsidiaries, National Foods Ltd and Colcom.
Shares of Econet Wireless Zimbabwe, the country’s biggest telecommunications firm, tanked 33 percent to US$0,18.
During the six months to August 2015, Econet Wireless Zimbabwe net profit plummeted 52 percent to US$23,8 million from US$49,8 million a year earlier as voice, SMS and broadband income dropped.
Investors are concerned over the potential implications of the infrastructure sharing deal that Government is mulling for telecommunications companies to adopt, analysts say.
Beverage maker, Delta Corporation skid 10 percent to US$0,73 after net profit sank 19 percent to US$35,7 million during the half-year to September 2015, as volumes declined.
Lager volumes dropped two percent, soft drinks 15 percent and sorghum beer volumes fell 12 percent.
OK Zimbabwe Ltd, the country’s biggest retailer saw its half-year to September 2015 net profit tumble 72 percent to US$1,2 million on continued limited consumer spend.
Zimbabwe Newspapers Ltd fell 38 percent to US0,5c despite reporting US$1,9 million net profit during the six months to June 2015, compared to the US$1,4 million net loss reported in the same period a year earlier.
During the month under review, Zeco Holdings Ltd, which has barely traded this entire year, rose 100 percent followed by Ariston Holdings Ltd up 57 percent.
Rainbow Tourism Group Ltd and ART Corporation Ltd climbed 48 percent and 22 percent respectively.
“The market is now set for a third successive year of losses with little expected to change in the last month except further losses,” said EFE Securities.
“Activity is also set to slow down as the holiday season sets in, leaving the market with even lower impetus.”
The year 2015 has been a forgettable one for sub-Saharan stock markets, whose economies are dependent on commodity exports. Earnings from metal exports have declined in line with the Chinese-induced crash in global commodity prices.
Metal prices have dropped by between 10 and 45 percent as China experiences slower growth. China consumes about 50 percent of the world’s major commodities such as platinum, nickel and copper.
Meanwhile, Zambian shares have plunged over 40 percent year-to-date, Nigeria 27 percent and South African stocks are down more than 15 percent.
