Onslaught on stock exchange continues
THE past three months have been the best of times for investors on the Zimbabwe Stock Exchange (ZSE) as the bulls first frolicked, paraded, then rampaged through the local bourse
, pushing the industrial and mining indices to all time highs of 346 494,00 and 78 061,40 points, respectively. The indices then took a breather for four days before beginning the fresh onslaught we are currently experiencing.
The local bourse opened the week softer as investors took profit following the impressive rally.
As the week progressed with no extraneous data to boost the market, the two indices surrendered their gains with notable losses in Mashonaland Holdings Ltd, Bindura Nickel Corporation Ltd and Rio Tinto Ltd.
The later of which dragged down the mining index, causing it to shed 9%.
News that the Tarrif and Competition Commision had reccomended scrapping the Zimbabwe Sugar Refineries’ monopoly did not help the market although it is a bit obvious that there can be no serious short-term contenders for part of ZSR’s market share,especially given the enormous barriers to entry that are associated with this particular industry.
Expectations that foreign currency rates were firming on the parralel market, further weakened activity on the ZSE and had some investors mulling over whether to place their funds in currency or the equities market.
Salvation for the bourse however seemed to come with the announcement of the new year-on-year inflation figure of 364,4%, which helped cast the different markets into proper perspective, apparently reminding investors that it is more prudent to place funds in assets, the premium class of which is equities.
America’s major indices ended the week in the red, having failed to find their way out of the confusion that was introduced into the equity market by Alan Greenspan’s testimony before congress.
The testimony, which pulled bonds from their early abyss, failed to excite the stock markets which closed the week lower, despite having started the week with a bit of a bang.
On Monday, a combination of strong earnings and upgrades from hold to accumulate, on several big names had the bulls pacing, ready to charge through the gates.
Citigroup and Bank of America got things rolling when they reported second quarter earnings that were above wall street estimates, raising investor hopes that the upcoming wave of earnings news would be positive.
As if taking a cue from the ZSE, the American market backtracked on Tuesday despite reassurance from Capitol Hill that rates would remain low for the foreseable future.
The rest of the week continued to be gray, casting in doubt a second-half economic recovery of the American economy.