Mixed Trading on Property Counters

PROPERTY counters were the worst performers on the Zimbabwe Stock Exchange in June shedding a weighed average of 17,5%.


There are four property counters on the Zimbabwe Stock Exchange –– Dawn Properties, Pearl Properties, Mashonaland Holding and ZimRe Property Investment (ZPI).

Analysts said the retreating of property counters in June was because most investors opted for quick returns in counters that are announcing their interim financial results.
During the period under review, there was a bias towards mining, telecommunication and retail counters among investors.
Property and construction counters are viewed as “long term investment” and are usually ignored during the reporting season. Long term investors however buy shares in the counters during the period.
Common investment strategies suggest that in a hyperinflationary environment, investors hedge against negative real returns by seeking refuge in non-interest bearing assets such as equities, the property market and the currency market.
There are also four construction firms on the local bourse –– Lafarge, Pretoria Portland Cement Company, Willdale Ltd and Murray & Roberts which traded mixed during the period under review as there was little activity in the construction sector.
Analysts said property counters were expected to gain as most listed counters released satisfactory results. This has resulted in a significant amount of money on the local bourse being invested in brick and mortar last week.
During the first week of July property counters put on a weighted average of 17,56%. ZPI gained US$0,15 (33%) to US$0,66. Mashonaland Holdings added US$0,30 (23%) to US$1,60. Pearl Properties put on US$0,50 (20%) to US$3 while Dawn Properties was steady at US$2.
 “We expect trading on the local bourse to remain mixed during the week ahead with volumes and values of trade being depressed due to the lack of liquidity on the local money market,” ZABG said this week.
“The Ministry of Finance’s recent decision to levy a 5% capital gains tax up from the current 1% will further dampen trade. We advise investors to buy with a long term outlook to reduce transaction costs,” the bank said.
Market analysts said property counters such as Dawn, Pearl Properties, Mashonaland Holdings were expected to trade mixed in the long term as both local and foreign investors have defined policies of how the market is going to operate.
Stock brokers said statistics are revealing a dilemma or self-limitations of investors in the diaspora considered privileged with disposal incomes which those in Zimbabwe lack.
Very low on investment and very high on subsistence, An estimated 20% prioritise investments in a business or in buying properties. The reasons often cited for the failure to invest had been the unstable political and economic climate.
Counters such as Murray & Roberts and Larfarge are expected to improve and be more attractive because of the demand for cement and increased construction in neighbouring South Africa ahead of the soccer world cup next year.
The current boom in the construction and infrastructure sector in South Africa is expected to continue well beyond 2010, as the country plays catch up after its under-spending in recent years.
Whilst property prices often move in a group, if the stock market index were to double this would be the average of a vast spectrum of movements with many shares rising far more than 50%, spreading the returns across many counters.

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