ZSE last quarter surge lifts equities, but challenges remain

HARARE,– The Zimbabwe Stock Exchange (ZSE) saw a surge in the last quarter of 2016 as investors sought cover for possible loss of value under the bond notes currency, but the rally failed to mask deficiencies in the southern African country’s economy which are set to spill over into 2017.

Bond notes, a parallel currency, was introduced in the last week of November to trade at par with the United States dollar. The government resorted to printing the notes in a bid to ease the shortage of US dollar notes in the economy, which it blames on smuggling of the reserve currency as well as a gaping current account.

Prior to October, the local bourse was sluggish, with the industrial index easing 15 percent on an annualised basis. The resource index was in worse shape, and was down 44,24 percent at June 30 before a recovery of sorts in the third quarter.

But local asset managers, fearing loss of value after the introduction of bond notes, sought to shield their investments in equities and properties, boosting the bourse performance.

The industrial index closed the year at 144,53 points, a 26,28 percent increase on the previous year while the mining index advanced 146,88 percent year-on-year to 58,51 points.

Total turnover decreased by 15,18 percent from $228,62 million in 2015 to $193,91 million in 2016, its lowest since 2009 when Zimbabwe dollarised.

The average monthly turnover also declined from $19 million in 2015 to $16 million in 2016, while volume of shares traded were down 32,47 percent to 1,5 billion shares. The month of December recorded the highest turnover in the year to the tune of $25,997 million.

August, on the other hand, recorded the least value of trades amounting to $7,076 million in the year under review. The chart below shows that much turnover in the year was recorded starting from October (last quarter) relative to the prior year.

Market capitalisation rose by 30,41 percent year-on-year to $4,008 billion as at 30 December 2016, attributable to gains recorded by most heavy weights.

The largest company by market share, Delta advanced 25,53 percent to close at 88,5 cents. The telecommunications giant, Econet, also added 42 percent to settle at 30 cents. Padenga, Old Mutual and Innscor advanced 107 percent, 71,68 percent and 60,21 percent to close at 16 cents, 349,21 cents and 48 cents in that order.

National Foods and BAT were up 37,41 percent and 25 percent respectively, while Seedco advanced 20,6 percent to 101 cents.

CBZ, however lost 4,46 percent to close at 10,5 cents in the year under review.

On the top five gainers, GB Holdings led the movers pack, advancing 700 percent in the year to 0.08 cent. ART and Riozim put up 510 percent and 188,46 percent to 6,1 cents and 30 cents respectively. Bindura and Colcom also landed in the top five after adding 163,16 percent and 117,65 percent in the year to close at 4 cents and 37 cents respectively.

Medtech was the worst performer in the year after shedding 50 percent to close at 0.02 cent. Cafca, PPC and NTS also lost 49,88 percent, 45 percent and 35,29 percent in that order. Ariston eased 32,69 percent to close at 0.35 cent.

On the mining space, Bindura and Riozim pushed the resource index high after their share prices grew 163,16 percent and 188,46 percent respectively. Falgold also added 20 percent to 0.60 cents. However, Hwange was flat at 3 cents.

Foreigners remained the dominant participants on the local bourse with 52 percent of the trades in 2016 being foreign trades, down from the 56 percent recorded in 2015.

Foreigners were net sellers in the year, having bought shares worth $60,264 million ($125,338 million in 2015) and sold shares worth $140,33 million ($129,66 million in 2015), reflecting diminishing appetite for local shares.

The bourse also recorded the least foreign purchases since 2009, showing its weak capacity to attract foreign portfolio flows, a situation which the Minister of Finance, Patrick Chinamasa said is worrisome. Chinamasa has urged the government to revisit the ZSE transaction costs, which he said are too high relative to other regional stock exchanges.

The net outflows witnessed on the local bourse continue to put pressure on the bank nostro accounts at a time when the economy is faced with cash challenges.

The introduction of bond notes remain the driving force behind the equities gains, with the economy seen performing poorly this year. Chinamasa projected a GDP growth of 0.6 percent for 2016 — half of his earlier projection of 1,2 percent — and 1,7 percent for 2017.

His projection remains optimistic, with the International Monetary Fund projecting a -0.3 percent growth for 2016 and -2,5 percent in 2017 in the absence of reforms and new funding to stimulate the economy.

Manufacturing capacity is seen below 40 percent despite a spike reported for some industries following a ban on imports in June as industry deals with many challenges, chief among them critical shortage of liquidity, power outages. – Source

Related Posts
ZSE falls on heavyweights losses, weak fundamentals
HARARE, – The stock market closed lower at 167.34 points with the main industrial index shedding 1.02 points during the week on the back of losses in major counters Delta, ...
READ MORE
Companies may now raise debt capital on Zimbabwe’s stock exchange
HARARE — Zimbabwe’s securities regulator has approved rules allowing companies to raise debt capital on the nation’s stock exchange, including minimum requirements for amounts and maturities of bond sales. Companies will ...
READ MORE
Delta’s poor earnings spark price crash
DELTA Corporation’s poor third quarter earnings sparked a stock market sell-off of its stock as the beverage maker’s share price tumbled 11 percent in three days of trading last week, ...
READ MORE
ZSE closes year in red
The Zimbabwe Stock Exchange (ZSE)’s mainstream index fell by 19 percent on a year on year basis in a year characterised by liquidity constraints. The last trading session for 2014, saw ...
READ MORE
US Fed raises interest rates for first time in a decade in ‘dovish hike’
WASHINGTON - The Federal Reserve hiked interest rates for the first time in nearly a decade on Wednesday, signalling faith that the U.S. economy had largely overcome the wounds of ...
READ MORE
FDI into Africa by-passes Zim, local firms create most continental jobs after SA
HARARE,– Foreign Direct Investment into Africa grew by 64 percent to $87 billion in 2014, but largely bypassed Zimbabwe, reflecting worries over President Robert Mugabe’s policies and the risk of ...
READ MORE
Mobile Banking Dominating Zimbabwe Financial Sector
HARARE—A comprehensive market assessment of retail financial services in Zimbabwe shows that mobile money operators are now dominating the finance sector. Banking activities appear to be on the decline due ...
READ MORE
Govt negotiates with banks to fund $500mln command agriculture programme
HARARE– Zimbabwe will borrow from private banks to finance the importation of farming equipment from Brazil, Belarus, Russia and India under its ambitious Command Agriculture programme aimed at enhancing grain ...
READ MORE
Germany leads European shares lower
London - European shares fell on Tuesday, led lower by German stocks after industrial orders unexpectedly dropped in Europe's biggest economy, with exporters such as autos also coming under pressure. German ...
READ MORE
Wheels turn in African markets
Africa, home to the fastest growing economies in the world, is the next frontier for the automotive sector where the number of vehicles sold is expected to reach almost 2.7 ...
READ MORE
ZSE falls on heavyweights losses, weak fundamentals
Companies may now raise debt capital on Zimbabwe’s
Delta’s poor earnings spark price crash
ZSE closes year in red
US Fed raises interest rates for first time
FDI into Africa by-passes Zim, local firms create
Mobile Banking Dominating Zimbabwe Financial Sector
Govt negotiates with banks to fund $500mln command
Germany leads European shares lower
Wheels turn in African markets

Arts & Entertainment

Arts & Entertainment

TLC to release first album without late Lisa ‘Left Eye’ Lopes

28th February 2017 Staff Reporter 0

Fans of TLC will rejoice to hear that the r’n’b ’90s much-loved girl group are due to unveil their long-awaited final album this summer. The manager of surviving members Rozonda ‘Chilli’ Thomas and Tionne ‘T-Boz’ […]