‘Economy still on the rocks’

THE Zimbabwe Stock Exchange (ZSE)’s market capitalisation rose by 0,36% to close the month of August at US$2,86 billion from US$2,85bn month-on-month.

By Fidelity Mhlanga

According to IH Securities’ monthly snap shot, the industrial index was up 0,42% to 99,26 points buoyed by a 1,54% gain in Econet Wireless Zimbabwe that offset a 2,64% loss in Delta Beverages.

The mining index gained 2,33% to 26,32 points sustained by a 7,14% gain in Bindura Nickel Corporation despite a 9,09% loss in Falcon Gold .

Notable gains were recorded in Barclays which surged 20%, Padenga grew 11,7%, Old Mutual up 11,19%, Innscor Africa gained 10,29% and CFI Holdings up 8,65%.

Other significant losses were recorded in National Tyre Services which fell 29,41%, African Sun down 19,33%, Willdale tumbled 11,76% and Dairibord regressed 10%.

Turnover decelerated 49,11% to US$7,07 million with average daily trades of US$336 690 in the same month.

The most significant contributions to total value traded were Delta, Econet and Simbisa contributing 57%, 9% and 6% respectively.

“The state of the economy remained rather precarious during the month of August. For starters, the economy slid further into deflation during the month of July, as annual inflation shed 0,24% to -1,60% and the month-on-month inflation worsened to -0,19%,” the brokerage firm said.

Total volume traded was down 26,99% to 41,26mn shares. Cumulatively, IH said, the trade deficit widened to US$1,6bn during the first seven months of the year, indicating the nation’s continued reliance on imports.

“In addition, the Zimbabwe Revenue Authority gross revenues for the first half of the year were 6,03% below target at US$1,65bn attributable to the difficult economic environment, while foreign direct investment traffic tumbled 70% during the period to July 2016 on the back of policy uncertainty,” IH said.

The firm said within the banking sector, most financial institutions met the Reserve Bank of Zimbabwe (RBZ) June 30 non-performing loans ratio target of 10%, with the sector average falling to 10,05% after US$528,40m had been transferred to the Zimbabwe Asset Management Corporation by June 30.

“We also saw generally a good set of results for the half-year to June 2016 from the banking sector, despite the liquidity challenges and we expect the full-year results to show the full effect of the reduction in transaction fees by the RBZ,” IH said.

“While imports are reported to have declined 8% to US$395m during the same month, mainly attributable to import restrictions emanating from SI 64 (Statutory Instrument 64), exports only increased 4% to US$184m, sustained by a 7,4% increase in gold deliveries to Fidelity Printers and Refiners.”