Royal Bank

Bull push index on stock exchange

THE bulls stampeded through the Zimbabwe Stock Exchange (ZSE), pushing the industrial index through the 300 000 mark, to close the week at 326 081,60 points.



>The minings index surged 21,6% higher to close the week at 54 177,12 points on the back of significant gains in Wankie.


ZSR was the week’s key performer, as the market continued to re-rate the counter following a succesfull tour of operations arranged by management.

For those who followed our advice and bought ZSR, well done, inflation is going to have a tough time keeping up with you.


Following the classic “Buy on the rumour” model, Wankie soared higher as well, pulling away from resistance at the 3 000c level amid speculation that someone was trying to take over the mine and hope that the new board will breathe life into the mining giant.


Determined not to be outdone, Tedco’s share price rallied following a cautionary statement.


On the other side of the coin, Zimpapers shed 20% after an impressive run. Cottco also found itself among the top losers, a week after featuring in the top five as punters took profit after an impressive rally.


International markets


The American markets opened the week firm, enjoying healthy gains as investors appeared geared up to maximise profits before the long weekend.


The Nasdaq composite outpaced the rest of the market with a 28-point lead inspired by strength in biotechnology and computer hardware stocks, which added a bullish tip to the tech-heavy index.


The Dow Jones Industrial average opened the week 72 points higher following upgrades on Microsoft. During the week, the Federal Option Market Committee cut 25 basis points from the overnight rate.


This has dropped the rate to 1%, the lowest since 1958, which, after number crunching translates into a 20% reduction in interest rates.


In a Jekyll and Hyde week, the bull went on to fade into a bear as the stock markets closed lower on Thursday ahead of a long weekend.


In other international markets, the Nikkei exploded to a fresh 44-week high with an upside that was so high that it’s now above its declining 20-month moving average for the first time since June 2000.


International commodity prices


Minerals traded firm with spot gold gaining 2,5% as a firming euro caused investors to place their funds in the United States dollar-denominated yellow metal.


Company news


Fidelity Life listing

Monday was the big day for Fidelity Life as the company listed on the ZSE. There were 6 662 404 shares traded on the first day, bidding starting at 295c, peaking at 300c to close at 298c.


The counter has gone on to gain 90% to-date and appears to be going strong.


In other news Hippo Valley Sugar Estates issued a notice to shareholders highlighting disputes between resettled A2 farmers and evicted commercial farmers over who should receive payment for cane delivered.


Hippo Valley has since instituted interpleader proceedings in the High Court.


In our opinion, this dispute will not have any material impact on company earnings in the short-term, but will have an impact on production in the long-term if left unresolved for too long.


With sugar having been elevated from being price controlled to being price monitored, and NCP Distillers Zimbabwe (Pvt) Ltd benefiting from increases on the sale of alcohol to beverage manufacturers, the company is set to do well.


Hippo Valley has been fullfilling export quota commitments to the European Union and the United States of America, which translates into forex earnings.


While regional exports had been hampered by the exchange rate at $55/US$1, the new exporter’s rate of $824/US$1 should boost foreign currency earnings, moreso if the currency is further devalued and if the rumoured 100% currency retention incentive for exporters comes to pass.

We recommend that investors watch this counter carefully.

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