ZSE lag­gards miss out on bull run

The Sunday Mail (Zimbabwe) - - BUSINESS NEWS - Enacy Ma­pakame Busi­ness Re­porter

IN A mar­ket that broadly shows lit­tle re­spect for fun­da­men­tals, some shares on the Zim­babwe Stock Ex­change (ZSE) are fail­ing to re­spond even to the most bizarre panic buy­ing in global mar­kets his­tory. On a year to date ba­sis, the stock mar­ket’s main­stream In­dus­tri­als In­dex has jumped 195 per­cent while to­tal mar­ket cap­i­tal­i­sa­tion soared 200 per­cent to $11,713 bil­lion by close of Thurs­day’s trad­ing.

The less ac­tive Min­ings In­dex is up 92 per­cent to 108 fol­low­ing a merry mood that sus­tained a rally in Septem­ber on spec­u­la­tive buy­ing.

While stocks like Gen­eral Belt­ings have jumped over 600 per­cent year to date, the eq­ui­ties mar­ket has its lag­gards that have re­mained un­changed year to date while oth­ers have ac­tu­ally weak­ened.

By close of trade Thurs­day, Na­tional Tyre Ser­vices (NTS), Get­bucks and Bor­der Tim­bers were flat at their Jan­uary open­ing prices of 1,1 cents, 3,7 cents and 20 cents re­spec­tively.

En­gi­neer­ing firm Zeco only “dec­o­rates” the stocks list with its pres­ence but hardly trades. While other stocks’ prices fluc­tu­ate on mul­ti­ple trades, Zeco trades only a pocket of shares once or twice in a year, apart from be­com­ing a peren­nial loss maker, which damp­ens any in­vestor cheer.

Since list­ing on the ZSE in Fe­bru­ary 2008, Zeco’s share­hold­ers have lost value dearly and its mar­ket cap­i­tal­i­sa­tion has whit­tled down to be­come the low­est on the bourse at just $90 000 from around US$1,44 mil­lion (ZW$101 tril­lion) in Fe­bru­ary 2008, us­ing the Old Mu­tual Im­plied Rate (OMIR).

At an an­nual gen­eral meet­ing held in the cap­i­tal last week, NTS in­di­cated sales vol­umes for the pe­riod be­tween April and Au­gust 2017 rose 17 per­cent on prior year com­pa­ra­ble pe­riod de­spite the stiff com­pe­ti­tion from smug­gled prod­ucts.

The firm, whose busi­ness is an­chored on im­ports, be­moaned the chal­leng­ing busi­ness en­vi­ron­ment char­ac­terised by for­eign cur­rency short­ages and un­fair com­pe­ti­tion from smug­gled prod­ucts which re­sulted in down trad­ing.

Agri­cul­tural con­cern, Bor­der, had its shares on-boarded on the Cen­tral Se­cu­ri­ties De­pos­i­tory on Au­gust 20, 2017; be­com­ing the last listed counter to do so, two years af­ter the ZSE au­to­mated.

How­ever, the mar­ket has also had a fair share of coun­ters slid­ing in the neg­a­tive. Amal­ga­mated Re­gional Trad­ing (ART), Rain­bow Tourism Group, Bin­dura and Hwange have failed to over­turn the year to date losses in the past few weeks when other coun­ters have been en­joy­ing the run­way.

ART has re­treated 25 per­cent to 4,56 cents, while RTG and Hwange are 4 per­cent lower to 1,15 cents and 3 per­cent lower to 3,74 cents re­spec­tively.

In the six months to June 30 2017, hos­pi­tal­ity group RTG re­ported a loss af­ter tax of $0,3 mil­lion, down from $2,9 mil­lion on cost cut­ting.

The group’s out­stand­ing bor­row­ings with lo­cal banks are at $1,8 mil­lion and the Na­tional So­cial Se­cu­rity Au­thor­ity (NSSA) which is the out­stand­ing prin­ci­pal amount at $13,6 mil­lion plus in­ter­est arrears, mak­ing it a to­tal of about $16 mil­lion.

Nickel miner Bin­dura has since the be­gin­ning of the year slipped 25 per­cent to 4,20 cents. Mar­ket watch­ers an­tic­i­pate Bin­dura will re­main prof­itable on re­cov­ery in its mar­gins fore­cast­ing net in­come to im­prove to over $1 mil­lion from the $0,6 mil­lion re­ported in fi­nan­cial year 2017.

How­ever, the down­side risks to such val­u­a­tions are global prices of nickel as well as de­lays to start re­fin­ing through the smelter.

Mar­ket watch­ers have up­graded the counter to a “spec­u­la­tive” buy rec­om­men­da­tion.

On the other hand, an­a­lysts con­tend ART, which un­til 2016 had been the best per­former ris­ing above 400 per­cent on a year to date ba­sis, has al­ready over­heated and might not ben­e­fit from the cur­rent rally.

Mean­while, the bourse gained 13 per­cent in the week to Thurs­day with to­tal mar­ket cap­i­tal­i­sa­tion clos­ing at $11,713 bil­lion from $10,319 bil­lion.

The mar­ket’s favourites Delta, Econet, BAT and Padenga were among the ma­jor value driv­ers for the week.

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