Zimbabwe stocks start year on weak note
THE ZIMBABWE Stock Exchange (ZSE) is continuously declining and this has sparked a sell-off in shares of Delta Corporation, the Zimbabwe associate unit of SABMiller, although there has been strong interest in telecoms group, Econet Wireless.
The economic fundamentals have been weaker in Zimbabwe, with most companies recording profit declines.
Investors in Zimbabwe were increasingly worried about declining disposable incomes, job losses and political uncertainty in the country, said analysts.
“The fundamentals are weak across the board, company profits are falling and there is no improvement in economic developments. Growth is still slow and demand for most goods and commodities is weak and investors will factor in this when making decisions in how they trade on the stock market,” said a market trader.
Market capitalisation on the ZSE slid by around 30 percent in 2015, starting off at $4.37 billion (R71.23bn) in January and closing the year at $3.1bn.
Dropped
According to data released by the bourse last week, the total value of shares traded during the year dropped from $453 million in 2014 to $228.6m, with the value of shares traded by foreign investors falling to $125m.
On Thursday, trade dealings were concentrated in Econet Wireless and Delta Corpora- tion. Delta Corporation has a market capitalisation of just more than $800m, while market capitalisation in Econet stands at $190m.
“Total value traded rose 650.32 percent to $1.09m dominated by trades in Econet, CBZ Bank and Delta Corporation, contributing 51 percent, 26 percent and 12 percent, respectively,” analysts at IH Securities said in a report on the ZSE on Friday.
The market eased by 0.17 percent in Thursday trade to close at a total market capitalisation of $3.2bn, with the industrial index down 0.18 percent to 114.10 points on the back of losses in Delta. Losses were also reported in Old Mutual.
On Friday, the ZSE traded flat, with turnover falling significantly to $314.9m from the previous day’s turnover of about $1.7m. Activity was also subdued with only 10 counters trading.
Update
“Notable stocks to trade were Econet, which traded steady at 21 cents with 1.8 million shares changing hands,” said Lynton Edwards Stockbrokers in a market update.
Foreign traders purchased $1.57m worth of shares and disposed of $1.55m worth of shares in trade dealings on Friday.
South African companies have a significant presence in Zimbabwe, with those listed on the ZSE including Edgars Zimbabwe, Hippo Valley, controlled by Tongaat Hulett as well as National Foods, in which Tiger Brands has a significant stake.
Other South African firms in Zimbabwe include Impala Platinum, Aquarius Platinum, Standard Bank and PPC.
Most firms in Zimbabwe are expected to be impacted by drought conditions that have remained persistent, a development experts say will in turn affect economic performance this year.
Zimbabwe’s manufacturing sector is mainly reliant on the agricultural sector, which, however, is still struggling after the farm seizures of 2000.