ZSE trading dropped by 21% in April

TRADING in shares on the Zimbabwe Stock Exchange (ZSE) fell by 21% last month after indigenisation regulations unnerved already wary investors.

Official figures show that trades in April dropped to US$30, 5 million from US$39 million in March.
The total value of stocks that have changed hands to date are now just over US$132 million.

Indigenisation and empowerment minister Saviour Kasukuwere earlier this year gazetted regulations that compel foreign-owned companies valued at US$500 000 or more to cede 51% stakes to black Zimbabweans.

Prime Minister Morgan Tsvangirai went on a collision course with the empowerment minister over the modus operandi of the empowerment drive, declaring the regulations “null and void.”

But recent media reports say Kasukuwere will revise the regulations to come up with a sector by sector approach to determine shareholding thresholds. The ZSE, however, has opened the month of May on a high after Econet’s financial results beat analysts’ expectations that showed US$113 in net earnings and other gains recorded in blue chip counters.

“There were also gains in other heavyweights like Delta, Barclays and Hippo as investors’ attention once again shifted to the market, said Kingdom stockbrokers in a weekly stock market report.

“The market had been bearish for quite some time as a result of companies’ general poor performance as well as issues surrounding the Indigenisation and Economic Empowerment Act which was gazetted in March 2010.”

Radar gained 48,1%, bringing its share price to 40 cents, followed by Mash, up 33,3% at 1,6 cents and Starafrica, up 28,6% at 9 cents. Seedco and Trust completed the week’s top five performers. There were 27 movers in the week.

Losses were recorded in Medtech, down 47,4% at 0,1 cents, followed by Willdale, down 44,4% at 0,1 cents and Hunyani, down 42,.6% at 2,.01 cents. Interfresh and CFX completed the week’s top five shakers. There were 25 shakers this week.

KSB said the stock market remained subdued despite a steady growth in bank deposits in recent months, a development analysts say show an exit from the ZSE by foreign investors to other markets. Statistics show that foreign investors accounted for 40% of trudes on the ZSE following the formation of the inclusive government. ZSE Chief executive officer Emmanuel Munyukwi was this week quoted in a business weekly saying foreign investors were now “taking their money elsewhere” following the gazetting of the controversial empowerment regulations.

KSB, however, expects the ongoing tobacco selling season to improve liquidity on the market.

“Lack of liquidity will continue to affect the market. Indications are that deposits have marginally increased to $1,4 billion from $1,3 billion in December 2009, a sign that the stock hasn’t been receiving as much funds as we would have wanted. The current tobacco selling season is expected to help improve liquidity in the market, with 77 million kilogrammes of tobacco expected to go under the hammer,” the report said.

Bernard Mpofu

 

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