ZSE opens year on low note
INVESTORS on the Zimbabwe Stock Exchange lost a cumulative $121 million in January alone on the back of weaknesses in both indices. The mainstream Industrials Index weakened 3,46 percent in January to 140,24 on losses in top cap counters. Total market capitalisation fell 3,01 percent to $3,914 billion from the year opening $4,036 billion on weakening heavy cap stocks.
Total turnover for the month amounted to $8,6 million after over 32 million shares exchanged hands.
But the market suffered from a foreign sell off, carried over from 2016 as foreign investors who usually make up the bulk of trades exited the market on economic perceived uncertainties.
Although the market’s momentum stocks, Delta, Econet, Innscor, BAT and Seed Co slipped or stagnated, they proved their mettle in the month as the most liquid stocks on the bourse.
Telecoms firm, Econet led the bears after succumbing to a 40 percent decline to 16,87 cents, in what analysts termed a sign of disapproval by investors of the company’s controversial $130 million capital raise.
Econet announced its intentions for the multimillion rights issue in which investors follow their rights by depositing money directly into a foreign bank account, which might limit participation of local shareholders due to shortages of foreign currency and the difficulty in making foreign payments.
The telecoms firm will tomorrow seek shareholder approval from shareholders for the rights issue.
Econet, which is the largest telecoms company also made headlines following a hefty increase in data charges, a decision that was reversed after an outcry by subscribers.
The country’s biggest company by market capitalisation, Delta, closed the month 1,18 percent softer to 88,93 cents.
The stock has felt the pinch from the economic challenges as its aggregate performance has continued to fall on narrowing consumer spend and low demand.
The beverage giant’s third quarter performance showed sustained declines.
But market watchers are upbeat the stock will remain a top pick for value preservation.
Meikles declined 19,2 percent to 10,50 cents while financial and banking group Barclays fell 12 percent to 2,8 cents.
But market watchers contend that the banking stock will achieve improved earnings following their last financials in which profitability went up despite intended divesture by parent company Barclay’s PLC.
The stock has always found itself on the spot for its conservative banking model and has traditionally traded at a premium.
Other losses in the month were recorded in Dairibord which lost 16 percent of value to 5 cents, Pearl which weakened 1,14 percent to 3,46 cents and Truworths, which closed the month 10 percent lower at 0,8 cents.
The country’s biggest retailer OK Zimbabwe also made to the list of bears’ of the month after falling 2,7 percent to 7 cents. The retail giant has been under performing in recent years due to stiff competition.
But its 2017 first half performance has shown improvements in performance resulting in enhanced profitability as the group seems to have found the formulae for cost containment, customer retention and attraction and shop competitiveness following refurbishments.
The market was however, not shot of risers. Headlining the risers were diversified media group, Zimpapers after posting a 40 percent surge to 0,7 cents.
Cement makers, Lafarge added 23 percent of value to 48 cents while PPC was 1,8 percent stronger to 56 cents.
Property concern Mashonaland Holdings closed the month 11 percent firmer to 1,8 cents.
Sugar processor, Hippo rose 4,28 percent to 36,50 cents while luxury crocodile skin producer Padenga firmed 4,5 percent to 16,75 cents.
Banking groups CBZ Holdings and FBC Holdings remained stable at 10,50 cents and 8 cents respectively.
Also unchanged were BAT, Seed Co and Afdis at $15,25, $1,01 and 60 cents in that order.
Afdis has been one of the consistent performers on the local bourse remaining profitable despite economic challenges. However, the falling consumer spend has seen some customers trade down the product range in search of value for money.
The Minings Index weakened 3,76 percent to 56,31 levels on mixed performances by its four counters.
On the upside was RioZim which rose 7,5 percent to 32,25 cents.
Prospects are brighter for RioZim as it added another mine on board — the reopening of Cam and Motor.
On the downside, Bindura fell 12,5 percent to 3,5 cents while Falgold and Hwange remained unchanged at 0,6 and 3 cents respectively.
Equities analysts are of the view that the midterm outlook will remain marred by liquidity constraints and weak aggregate demand which may dampen stocks.
However, the drive towards value preservation may see investors seeking cover in the equities market , helping it maintain resilience.
Blue chips like Delta, Econet, Innscor, BAT, Seed Co, Padenga and PPC will likely remain favourites for investors seeking safety to avert uncertainties.
Investors will also look at companies that have restructured to adapt to the challenging economic environment.