Investors cautious on the ZSE
INVESTMENT on the equities market remained subdued last week as the current bout of company earnings for half year or quarterly performances failed to inspire trading volumes on the Zimbabwe Stock Exchange (ZSE).
The optimism that gripped the economy following the announcement of Finance Minister Mthuli Ncube’s fiscal measures is slowly being replaced by pessimism as the economy continues to battle foreign currency shortages.
In the past week, several listed companies released half year results as well as quarterly trading updates that show growth in both volumes and profitability. However, limited foreign currency shortages had an effect on operations.
Resultantly, the financials failed to add enough spark to the stock market, which usually benefits from strong corporate earnings as investors take positions in performing counters.
In the week to Thursday, all benchmarks, except the Mining Index, closed the week in the negative. Total market capitalisation fell 5,1 percent to $16,5 billion. The primary All share Index slipped 2,41 percent to 157,3 points while the ZSE Top 10 closed the week 3,8 percent weaker at 159,66 points. At 528,08 points, the Industrial index closed the week 2,44 percent lower than prior week’s 541,34 points. The Mining lndex of three active counters remained flat at 208,71 points.
In the week under review, largest stock by market capitalisation Econet shed 12,7 percent to US$1,57 from prior week’s US$2,08. The telecoms giant’s subsidiary Cassava Smartech launched a platform that enables its mobile subscribers to open bank accounts using their mobile phones.
Industrial conglomerate Innscor slipped 3,9 percent to US$1,87 amid revelations that the group’s operations are severely affected by foreign currency shortages. Innscor has interests in various sectors but predominantly in food processing. Its subsidiaries include National Foods. In a trading update for the first quarter of financial year 2019, the flour milling unit did well but has been experiencing disruptions that threaten the smooth flow of operations.
The country’s wheat requirement is predominantly imported and last week, Natfoods indicated in a statement that it was due to close its mills in Harare and Bulawayo due to supply challenges.
But Innscor chairman said the whole group is engaging Government to chart a way forward on the foreign currency shortages. Month on month, the market weakened as all key indicators closed November in the negative. Total market value fell 4,08 percent to US$17,4 billion while the primary All Share Index closed 2,09 percent lower to 160,4 points.
The industrial Index gave up 2,04 percent to 538,66 points while the Mining Index succumbed 4,04 percent to 208 points on losses in RioZim and Bindura that fell 5,26 percent and 1,13 percent respectively .
At 164,98 points, the Top 10 Index was 1,49 percent lower than prior month.
Total turnover fell 22,37 percent to US$118,03 million, with average daily trades of US$5,37 million realised during the month. Significant value drivers were Old Mutual, Afdis and Econet that contributed 20,37 percent, 19,27 percent and 17,36 percent respectively.
Total volumes went down 51,33 percent after 153,88 million shares exchanged.
Headlining risers for the month was Rainbow Tourism Group (RTG), which went up 37,93 percent; followed by First Mutual Properties that rose 25,57 percent. Banking groups NMB Bank and ZBFHL went up 20 percent and 19,34 percent respectively while Delta put on 13,50 percent.
Biggest losses were recorded in African Sun that went down 32,20 percent followed by First Mutual Holdings that let go of 24,41 percent of value.
Hippo, Meikles and Edgars also decreased 23,88 percent, 23,19 percent and 20 percent activity. Going forward, consumer and retail stocks are expected to be sustained by additional purchasing power granted to the civil service in the form of bonuses, resultantly cushioning the lowering demand.