Stocks tumble on profit taking

21 Sep, 2014 - 09:09 0 Views
Stocks tumble on profit taking

The Sunday Mail

Stories by Enacy Mapakame

SHARE prices dropped 2,2 percent in four trading days on the Zimbabwe Stock Exchange on profit taking, reversing significant gains recorded a fortnight ago.

In the four days to Thursday, the mainstream industrial index fell 2,2 percent to 195,70 points.

Minings declined 10,3 percent to 92,80 points from 103,45 points a week ago following across the board losses in the four quoted companies – RioZim, Bindura, Hwange and Falgold.

A week earlier, industrials had seemed close to erasing year-to-date losses after a mini-rally helped the index break the 200-point mark.

At current levels, however, the index is down 3 percent since January 2.

Government recently slashed economic growth forecasts from 6,1 percent to 3,1 percent, weighed by poor performances in mining and manufacturing, which contribute a cumulative 30 percent in GDP.

Mining sector growth is now expected at a negative 2 percent following subdued gold, platinum and diamond output during the first half of 2014.

Agriculture is, however, forecast to grow 24 percent on stronger maize and tobacco production.

The sector was initially seen rising only 9 percent this year, but with 216 million kg of tobacco and 1,46 metric tonnes of maize, agriculture exceeded expectations.

Finance and Economic Development Minister Patrick Chinamasa expects tourism to add 15 percent to GDP, up from 10 percent last year.

Total market capitalisation has come down to US$5,8 billion, inclusive of Econet’s class A shares, from US$6 billion in recent weeks.

On Thursday, over 3,3 million shares worth US$1,11 million were traded, down 19 percent from the previous day.

Of the index shares last week, heavyweight counters fell the most.

Econet, Zimbabwe’s largest telecommunications company, lost 9,4 percent to US77c.

The cellular network operator is seeking to grow data and mobile money revenues to compensate for declining voice and SMS income, the traditional cash cows.

In the full year to February 2014, Econet reported 1,8 percent revenue decline in voice, SMS, interconnect and roaming services.

Delta, the biggest listed firm, fell 4,4 percent to US129c after ‘‘overheating’’ in the previous week.

The beverage maker has seen lager and soft drink volumes fall in recent months owing to weak consumer spend.

Last week, Delta had to reduce prices for its range of clear beers by between US5c and US20c.

Giant fast foods retailer Innscor dropped 4,6 percent to US72c after reporting that full year to June 2014 earnings per share fell to US4,32c from US7,19c the previous year.

The group will pay a dividend of US1,3c, down from 1,8c paid the previous year.

Analysts are expecting Innscor shares to fall to as low as US63c this year.

In the past week, however, National Foods Ltd climbed 24 percent to US310, as the agro-processor reported after-tax earnings in the year to June 2014 soared 20 percent to US$16,7 million from US$13,9 million a year earlier.

In minings, RioZim lost 12,3 percent to US20c and Falgold changed only marginally to close at US4c. Bindura plunged 16 percent to US8c and Hwange lost 5,8 percent to US8c.

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