Foreign Investors Give Boost to ZSE

THE stock market’s fine run continued into yet another week as positive economic developments continue to hit headlines.  


The presence of foreign investors is a major driver of the market at the moment with a lot of money being pumped into the share market. This, coupled with lines of credit that have been given to Zimbabwe, has improved liquidity in the economy.

Last month stocks struggled for direction as investors reacted to interim and year-end financial results which gave disappointing economic forecasts.  

            
When the market hit its lowest point on March 24 2009, analysts and fund managers took this as a strong buy indicator which resulted in a stampede leading to the current bull-run.  

According to Kingdom Stock Brokers, in the absence of US dollar denominated financial data, there was no agreement as to the method that could be used to evaluate share prices in the newly dollarised environment.  

“This resulted in very low bids to the few buyers who were then available in the market as they also wanted to avoid buying overpriced assets.

“The presence of more buyers now has seen more demand for the shares thereby pushing prices to higher levels.  The blue chip counters have now stabilised while the share prices of the small counters continue to oscillate as investors search for right value,” said Kingdom.

On Monday the industrial index surged 28,9 points (29%) to close at 128,8 points on the back of strong gains in financial service counters. Barclays added US 6c (100%) to US12c.

Management at Barclays told analysts that deposits during the month of April were between US$50 million and US$55 million.

NMB added US0, 65c (187%) to US0, 86C, Trust was up US1, 5c (75%) to close trade atUS3, 5c, CBZ was US3, 99c (133%) firmer at US6, 99c. CFX closed the week US0, 01c (14%) stronger at US0, 80c. The bank has released its 2008 December year-end financial statements.

Mining counters rallied 67,6 points (67,6%) to 228,3 on the back of firmer metal prices and news that the lines of credit recently availed to Zimbabwe are earmarked mainly for mining and agricultural sectors.

Nickel miner Bindura surged US10c (100%) to US20c while Falgold ended last week at US$5c (62,5%) stronger at US13c. RioZim closed the week US54c (35%) stronger at US$2,10 while coal miner Hwange advanced US15c (33,33%) to trade at US60c.

On Tuesday, the industrial index rose 2,3 points (1,6%) as investors started to cash in on recent gains.
On Wednesday share were on the back foot as profit taking gained pace. Market prices have been gravitating  downwards towards regional parity levels putting pressure on margins.

The direction of 11 counters in the short-term will be determined by the outcomes at their AGMs. Ten AGMs are scheduled this month — Larfage and Cafaca May 21, ABC’s in Gaborone on May 26, Pearl Properties May 27, British America Tobacco, RioZim and DZL May 28 and Afre May 29.

Shareholders for Econet, Kingdom Miekles Africa and Rainbow Tourism Group (RTG) are keeping their cards close to their chest ahead of potential battles at their AGMs.

A lot of behind the scenes action has been happening at the companies since the beginning of the year.

RTG majority shareholder Nicholas Van Hoogstraten wants to fire the entire RTG board for allege “incompetence” but does not have proposals on who should replace the directors.

Some analysts believe Van Hoogtraten is not being realistic and still has an axe to grind over the company rights issue three years ago.

KMAL chief executive Nigel Chanakira and his chairman John Moxon have to iron their differences ahead of the company’s AGM in June if shareholder confidence is to be restored.

Both can appoint proxies.

At Econet’s AGM, their “controversial” chairman Tawanda Nyambirai has said he is stepping down due to conflict of interest.

Conglomerate CFI will release its results at an analyst’s briefing next week.

Apathy among investors during the past few years is evident in most results published recently for the end of December 31 2008 reporting season. Corporate profitability, in most instances, was at distressed levels with declining volumes, rising costs and a severely overvalued Zimbabwe dollar.

Whilst these factors were to some extent offset by access to “cheap money during burning period”, this has not been enough to mitigate the fall in profitability for most companies. 

BY PAUL NYAKAZEYA