THE Zimbabwe Stock Exchange (ZSE) rallied in the month of October, gaining 23,44% from US$2,81 billion to close the month at a total market capitalisation of US$3,46bn.
By Fidelity Mhlanga
According to Inter-Horizon Securities’ (IH)monthly snapshot, the industrial index rose 22,09% to close at 120,82 points buoyed by gains in Delta, up 21,37%, Econet, up 53,06% and BAT, up 22,95%.
The mining index rose 26,87% to 33,76 point sustained by gains in Bindura Nickel, which gained 66,67% while RioZim grew by 6,12%.
Other notable gains were recorded in Axia 66,67%, Zimpapers 60,00% and OK Zimbabwe 42,35%.
Significant losses for the month were seen in Truworths 37,50%, Ariston was down 22,22%, Dairibord down 16,67%, Pearl Properties slipped 9,09% and Nicoz Diamond down 6,25%.
Turnover rose 73,06% to US$23,20 million, with average value trades of US$1,10 million realised in the month.
The most significant contributions to total value traded were Delta, Econet and Innscor contributing 43%, 14% and 13% respectively.
IH said Econet, whose profit after tax fell to US$15,0 million, a 37,1% decline from the US$23,8 million achieved last year, expended US$15,4 million during the period on capital expenditure compared to US$45,7 million last year as the prevailing liquidity challenges made it increasingly difficult for the group to continue making investments in capacity expansion.
Total volumes traded went up 156,89% to 177,38 million shares.
“October saw the downward revision of Zimbabwe’s economic growth forecast for 2016 by IMF (International Monetary Fund) to -0,3% and -2,5% for 2017. The country also slid four places on the Doing Business ranking to 161, being ranked lowly on the trading across border cluster for introducing a mandatory pre-shipment inspection for imported products earlier in the year,” IH said.
The country cleared its debt arrears (US$107,9 million) to the IMF’s Poverty Reduction and Growth Trust by transferring part of its Special Drawing Rights holdings kept at the IMF. The IMF, however, insists that no fresh capital will be released until Zimbabwe clears all its debts and implements key economic reforms. Year-on-year inflation improved to -1,33% in September from -1,43% in August due to an increase in prices of basic commodities, spurred by the introduction of SI64.
The persistent deflationary environment, according to IH Securities, contributed to the decline in revenue at Delta (-8%h/h) despite volume support in the Sorghum beer segment (+6% h/h). The Coca-Cola Company has since notified Delta and its associate Schweppes of its intentions to terminate their bottler’s agreement, a development expected to have material impact on the group’s top-line.
“The Ministry of Finance believes the economy will grow 4,8% in 2017, on the back of a cocktail of reforms and positive external factors, chief among them above average rainfall which is expected to lead to a bumper harvest. As such, the Government of Zimbabwe is soldiering on with Command Agriculture, having secured financing from local pension funds (US$40 million), as well as US$150 million from the PTA Bank to purchase irrigation equipment, while farmers have already started collecting their inputs for the 2016/17 farming season,” IH added.