Royal Bank

Mixed fortunes for ZSE investors
 
THE Zimbabwe Stock Exchange (ZSE) traded mixed this week. It opened relatively strong, but on Wednesday and Friday it traded softer.


T face=”Verdana, Arial, Helvetica, sans-serif”>Overal, the industrial index gained 3% to close the week at 336,183 points.

At the beginning of the week, NMB Holdings Ltd (NMB) was suspended from trading but the suspension was lifted by Wednesday morning’s trading session.


On the day NMB was suspended, it was trading at $125 and ended Friday’s trading weaker at $100.


It is our opinion that there is still value in NMB and the price should rally again ahead of results.


Other industrial counters to gain include Mashonaland Holdings Ltd (Masholds) which gained 94% on the back of news about negotiations the company is engaged in.


The minings index rallied strongly by the end of trading on Friday to gain 44% closing at 78 061 points.


This was underpinned by gains in Rio Tinto which ended the week on 230 000c.


It seems all mining counters are coming into their own, Wankie Colliery Company Ltd ended trading on Friday at 8 100c and Bindura Nickel Corporation Ltd (Bindura) at 85 000c.


At mid-week, the market was showing some signs of fatigue.


Many investors took profit and Zimbabwe Sugar Refineries Ltd (ZSR) continues to find itself hit by strong profit taking.


Other counters to lose include Murray & Roberts and Edgars Stores Ltd (Edgars). Investors should identify counters that are softening with a view to buying on weakness.


One such counter to pounce on as soon as it weakens is Afdis Ltd.


Softening in some counters should not send panic signals to investors, we still maintain that as soon as we get into the reporting period, the market will gain some momentum from good results.


International markets


Stock markets in the United States were closed on Friday for the Independence Day holiday.


On Tuesday, US stocks proved resilient, with strength in technology pushing the broader market to a higher close.


The market ended mixed on Wednesday as investors awaited the first batch of earnings reports.


By the end of the week, US markets were softer than mid-week trading levels after below expectations results from the internet company Yahoo and lacklustre economic data stoked fears that corporate profits and the economy may not pick up enough to support the market’s recent rally.


A bleak unemployment report also hurt investor sentiment.


Asian markets continued their strong run, closing higher on Monday mainly due to gains in technology stocks.


In Tokyo, the Nikkei 225 average gained 2,89% on Monday.


Japanese stocks closed even higher on Wednesday, with the Nikkei 225 finishing just below 10 000 points, while other Asian markets were mixed.

European stocks jumped on Monday’s opening after a strong performance from the Asian markets with metal stocks in focus after Canada’s Alcan launched a hostile bid for Pechiney.


However European markets fell in early trade on Wednesday as weak sales figures reported by some listed companies forced investors to reassess their more positive forecasts.


International commodity prices


Both precious and base metals prices remained firm.


The European Central Bank’s decision to hold their rates for now coupled with the bad US job data was a sufficient catalyst for gold to rise. The silver price suffered from a bad closing in the US equities.


Oil prices were firmer as well on concerns about the outlook for petrol supplies in the US.


The price of the benchmark Brent crude oil won 79c a barrel to US$29,29.

Company news


Mashonaland Holdings Ltd (Masholds): The group has issued a cautionary statement to shareholders.


Apparently, Masholds are in negotiations in respect of a number of transactions.


The company asserts that if these negotiations are successful, the asset base of the company will materially increase.


It is on the back of this news that the Mash share price rallied from $7 on June 11 to the current price of $33.


With the conclusion of the process of unbundling of Willdale Ltd and Powerspeed Ltd, Masholds remained a shell of it’s former self.


The chairman adressed the issue of which direction Masholds would now take in his annual statement.


He said: “…..the Board has received approaches from a number of parties in the property world who have expressed interest in using the Mash vehicle for an expanded and specialised property owning and development company. This concept has also found support from the ZSE.”


It is our opinion that Masholds will be joining forces with an established property entity which should add value and give the company direction.

Bindura Nickel Corporation (BNC): BNC announced the conclusion of the disposal of Amzim’s 52% stake to Mwana Africa (Pty) Ltd deal.


The purchase and sale was concluded on July 10.


As a consequence of this Amzim board representatives have resigned.

Earlier in the week, BNC announced a healthy interim dividend of $47,60 per share. In our opinion this serves as an indicator of the calibre of results we can expect from BNC for the half year 2003.


It is worthwhile to take a position in this counter ahead of the results release.


Tedco Ltd: The company announced a scrip in lieu of cash dividend offer.

The offer is at a discount price of $36,50. The present share price is $67.

If accepted by all shareholders, this will result in the issue of 6,327,085 new shares in Tedco.


In our opinion, the price of the offer is very attractive and we recommend that shareholders take up the scrip option.


Stock picks for the upcoming week


There are still various opportunities for buying into the market even though the market has generally become pricey.


We recommend investors buy into TPH, Interfresh and Afdis.


As speculative buys we recommend Mash, Medtech and Hunyani.