Financials unlikely to change ZSE fortunes

WHEN the reporting season began, the market was hoping financial results would tickle the market but halfway through the season, analysts doubt the last set of financials will change the market’s fortunes.

Analysts predict the stock market will continue with its lukewarm performance for the remainder of the year.
“The truth is that many companies have now come to terms with the costs associated with dollarisation and are trying to get the basics right. These include liquidity challenges, erratic supplies of utilities, high operational and maintenance costs, low capacity utilisation and shortage of raw materials,” a stock broker told businessdigest on Tuesday.

This week, the industrial index opened the week lower at 132,98 points after shedding 0,24 points (0,18%). Hippo lost 5 cents to close at 100 cents as PPC went down 3 cents to close at 327 cents.

SeedCo was 1,20 cents softer at 93 cents with Econet and Murray and Roberts  a cent lower  at 455 cents and 20 cents, respectively.
Meikles led the gains up  2 cents at 35 cents with Star Africa adding 50 cents to close at 6,50 cents.
Innscor was slightly up at 47 cents and Ariston pushed up 20 cents to close at 1,20 cents.

Aided by a Mining Indaba and potential investments of over US$15 billion, the mining index went up 10,43 points (6,48%) to close at 171,43 points as Hwange’s recent winning streak continued with a 5 cents gain to close at 40 cents.

Bindura added a cent to trade at 14 cents whilst Falgold ended 0,20 cents to close at 6,20 cents. RioZim eased 4 cents to 190 cents.
The economy has remained illiquid and market activity continues to be constrained. The reduction of transaction charges early this year has even failed to stimulate activity on the stock market to anticipated levels.

Analysts said the significant decline in corporate clients who used to be active on the local bourse was impacting on the share market growth, for instance banks are no longer involved in non-banking activities.

This includes investing directly into equities as a hedge against inflation. This has significantly reduced the effective demand for stocks, leading to depressed prices.
On Tuesday the industrial index retreated 1,80 points (1,35%) to close at 131,18 points as most heavyweight counters lost ground.
Cement maker Larfarge closed at 90 cents with Econet and Natfoods down 5 cents lower at 450 cents and 85 cents, respectively.
PPC slipped 2 cents to close at 325 cents whilst Barclays and Innscor shed a cent each to close at 8 cents and 46 cents.

On the upside, ABCH added a cent to close at 28 cents as NicozDiamond and Zimplow rose 0,30 cents to trade at 2,10 cents and 4,30 cents.
OK Zimbabwe gained 0,20 cents to trade at 9 cents.

The mining index gave up 2,96 points (1,73%) to close at 168,47 points mainly due to a loss in RioZim down 10 cents at 180 cents.
Bindura and Hwange were unchanged whilst Falgold advanced 0,30 cents to close at 6,50 cents

Going forward, analysts say if the current economic atmosphere is to be maintained, with the indigenisation debate still raging on, foreign direct investment not trickling through and economic blueprints being churned out without realistic targets, the equities market will continue stuttering. The maximum market capitalisation is likely to remain around US$3,2 billion and only 18% of the listed counters are expected to realise real capital gains.

 

Paul Nyakazeya

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