Equities market remains bullish

EQUITIES rose marginally this week with limited trades in value and penny stocks.

Chris Muronzi

The mainstream industrial index closed 0,03% up on Monday driven by gains in ZB Financial Holdings up 19,6% to close at 4,52 US cents and Turnall up 17,6% to close at 1 US cent.

Other gains were recorded in Innscor, up 1% to close at 54 US cents, Masimba up 6,7% to close at 1,60 US cents.

Only 10 counters traded on the ZSE with marginal gains in four while the four were in the red.

The trend continued into Tuesday with the mainstream index up 0,33% to close at 149,3 points. Only six counters recorded gains. Hippo and Rainbow Tourism Group led the risers, gaining 13,2% and 15%. at Industrial 149,98, up 0,03% Tuesday. Other gains were in recorded in Old Mutual and CFI up 0,4% to close at 348 US cents and 9,74 US cents.

On Wednesday, the key industrial index was up 0,3% to close at 148,98 points.

Only industrial counters traded on the ZSE with five recording gains. General Beltings rose 100% in Wednesday’s trade to close at 0,08 US cents. The company has a market capitalisation of US$429 271. On a year-to-date basis, the counter is up 700% while on a quarter-to-date basis it is up 300%.

FML was up 16,7% to close at 3,50 US cents. Padenga was up 0,5% to close at 17,09 US cents while RTG was up 4,3% to close at 1,20 US cents.

Risk-averse fund managers have been ploughing back into stocks amid bond notes fears and uncertainty.
Shares are seen rising as uncertainty over the newly introduced currency continues, with analysts seeing no immediate end to the cash problems besetting the economy.

“Interest in shares should continue in the short term,” an analyst said.

The central bank two weeks ago issued bond notes at par value to the US dollar amid concerns the promissory currency did not have real value to warrant a parity rate to the American unit.

The authorities insist the bond notes are backed by a US$200 million Afreximbank facility the government is yet to make public.

“What we have observed is that the interest in equities has been widespread across the bourse and not limited to the counters that you mentioned,” an analyst told businessdigest recently. “Interestingly, this interest has largely been driven by local investors while we have seen the majority of the foreign interest being on the disposals side. We are more than convinced that a surge in local demand is being spurred by the fear of the introduction of a surrogate currency in the form of bond notes.”

This, analysts say, has seen funds shifting to equities.

Fund managers, who had adopted a general wait-and-see attitude owing to the dismal state of the economy, weak investor sentiment, poor government economic policies and Mugabe’s advanced age and lack of a succession plan, have been left with no choice but to move cash into safer investment classes.

“As a consequence, we are seeing funds migrating from cash and near-cash assets into equities. This, in our view, has been the primary driver of the market gains and is now being augmented by returning foreign demand in selected stocks,” an analyst said.

But the bulk of foreign investors have been liquidating their positions.

Repatriation of dividends and payments to foreign investors is proving to be a nightmare since the beginning of cash problems. The resources index was flat Monday, gaining 6,43% on Tuesday to close at 59,09 points.