The Sunday Mail
The slump on the ZSE has also affected heavy-weight counters
LOCAL stocks remained unresponsive to interventions made in both the mid-term fiscal policy review and the mid-term monetary policy statement of July 30, 2015 and August 5, 2015, respectively, with heavyweight counters also falling.
Government recently reviewed the economic growth forecast for 2015 from 3,2 percent to 1,5 percent — the lowest in six years.
Investors have lost more than US$500 million from sagging stocks in the first seven months of the year.
Figures from the Zimbabwe Stock Exchange last week showed total market capitalisation had dropped 12 percent to US$3,77 billion from US$4,3 billion at the beginning of 2015.
The industrial index has tanked 11,9 percent since January’s opening of 163 points to 143,58 points as at August 7. Minings have plunged 40,1 percent to 39,69 points from 66,31 points at December 31, 2014.
Market watchers say the marked decline in heavily capitalised counters underpins the bearish trend.
A market is considered bearish when it loses at least 20 percent from peak levels inside a year.
Econet Wireless Ltd has lost US$137 million in value in the past seven months with the stock slumping 50 percent to USc30 year-to-date.
Delta Corporation Ltd had US$59 million in value wiped off as its stock fell five percent to USc97; while National Foods Ltd and OK Zimbabwe are now valued at US$24,6 million and US$26,8 million, respectively, which is below what they were worth at the end of 2014.
In minings, Bindura Nickel Corporation Ltd has shed US$37 million after sliding 53 percent since January to USc3.
Of the top 10 ZSE shares, only three have reported gains over the past year, helped by strong earnings performances.
National Foods Ltd is up 50 percent, Seed Co Ltd 22 percent and Old Mutual 1,9 percent.
In the past 52 weeks, Hippo Valley Ltd has plummeted 43,5 percent.
Delta Corporation, Innscor Africa Ltd, BAT Ltd and Barclays Bank Zimbabwe Ltd have all slid between four percent and 25 percent.
Analysts project that the market will continue drifting lower on weak economic performance.
“We are cautious about the outlook for ZSE equities.
‘‘We expect further commodity price declines to provide significant headwinds to the country’s income flows and growth prospects,” said Lynton Edwards Stockbrokers in a research note.
Companies have continued to struggle with negative fundamentals ranging from weak cash flows and balance sheets, low or negative return on assets, and high gearing.
Beverage maker Delta continues to smart from declining consumer spending.
In the quarter ending June 2015, Delta reported subdued volume performance across all beverages categories.
Lager volumes declined eight percent, sparkling beverages fell 15 percent, traditional and dairy mix beverages fell 11 percent, while sorghum beer recorded a decline of 12 percent compared to the same quarter last year.
In all, revenue for the quarter fell 10 percent.
“Given very little change in the macro-environment and in the absence of near-term catalysts to change, we expect the economic environment to remain generally constrained,” said IH Securities.
“Although the market is not inexpensive, we suggest a selective approach to valuations within the market; with a focus on defensive stocks with good management teams that are perceived as oversold.
“We also lean toward stocks that are positioned to service the lower end of the market or the informal as well as export-facing counter and counters with regional diversification.”
