The Sunday Mail
Enacy Mapakame Business Reporter
THE market shares last week continued on a free fall.
By close of trading on Thursday, the Zimbabwe Stock Exchange’s mainstream industrial index had declined 3,2 percent to 175.24 points since March 21.
It has also shed 13,3 percent since January 2.
The main index has only gained once in the past 14 trading days as heavyweight counters took a battering, while the mining index ended at a record low 29.51 points on Thursday and has lost more than 35 percent of value since the beginning of this year.
On Thursday, the mining index fell 0.73 points or 2,41 percent after Riozim eased five cents to close at 20 cents, whilst Bindura and Falgold were flat.
Hwange gained 0,99 cents to six cents. Old Mutual lost three cents to 252 cents and ABC Holdings dropped two cents to 43 cents after reporting 29 percent earnings growth in the year to December 31, 2013.
Other losses were in Cafca, Seed Co and Truworths.
President Mugabe appointed CBZ Holdings Ltd group chief executive Dr John Mangudya the new Reserve Bank of Zimbabwe Governor, ending months of speculation as to who would take to the helm of the apex bank.
Dr Mangudya’s appointment is considered key to current economic growth efforts.
Cairo-based financier the African Export and Import Bank recently injected more than $100 million for the interbank market, a development that is expected to help ease the liquidity crunch.
ABC Holdings chief executive Mr Douglas Munatsi noted last week that the launch of the US$100 million interbank facility was likely to improve efficiency in the banking sector.
However, the ZSE is considered indifferent to local economic fundamentals.
Last week, blue-chip counters Econet, Delta, BAT and Innscor took a hit, with the counters dropping US7c, US 7c, US$2 and US6c respectively in the past 10 days.
Total market capitalisation also declined to US$4,6 billion from US$4,8 billion a week earlier.
Stockbrokers MMC Capital said the persistent liquidity challenges have caused the market to soften.
“The operating environment, which is characterised by liquidity constraints, worsening balance of payment position, company closures and waning aggregate demand remains challenging for the majority of companies. Fiscal pressure continues to mount amidst shrinkage in the tax base. . .
“The issue of resource poor economies outperforming resource rich countries has been a constant keynote of economic history.
“This indicates that abundance of resources alone will not help in improving the fortunes of the country.
“Capital formation, which includes production in factories is an issue in Zimbabwe as the local industry remains haunted by the lack of working capital.
“Our view is that the turnaround ability of the local manufacturing sector will remain clipped on the back of structural challenges emanating factors such as inadequate infrastructure, foreign competition, power outages and limited raw materials,” said MMC Capital in a market commentary last week.