Stocks bloodbath continues

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Kudzai Kuwaza

STOCK valuations plummeted further on the local exchange, as the bloodbath triggered by weak investor sentiment, dim economic outlook and general tight liquidity conditions persists in the market.

Total market valuations fell 1,69% last week to close at ZW$21,29 billion weighed down by losses in big caps as the re-rating of counters continues.

The mainstream All Share Index ended last week 0,98% lower at 164,37 points while the Top 10 Index was down 1,88% to 146,16 points. The Industrial Index shed
1,42% last week to close at 545,75 points, while the Mining Index gained 0,39%, ending the week at 262,69 points.

Delta, Econet and Cassava recorded losses of 7,22%, 3,12% and 2,02%, respectively.

The week’s top gains were realised in Ariston, Zimpapers and RTG, up 20%, 20% and 14,67% respectively.

The week’s biggest losses were registered in First Mutual Holdings, down 17,65%, MedTech, down 14,63% and Meikles, down 6,67%.

Volumes traded totalled 193,22 million shares and averaged 38,64 million shares per day while weekly turnover totalled ZW$41,64mn. Average daily value traded
was ZW$8,33million for the week.

In its weekly report, IH Securities said the Zimbabwean dollar depreciated against the United States dollar on the inter-bank market last week as the mid-rate
closed the week 4,28% higher at ZW$11,17.

Bids and offers ended the week at 10,8057 and 11,5386, respectively. The average spread widened from ZW$0,6785 to ZW$0,7329.

In terms of monetary value, the bourse lost more than US$2,4 billion in the last two months from its peak market capitalisation of US$4,75 billion on the eve
of June 23 2019 after government outlawed the use of US dollars in local transactions.

Gold export earnings, IH noted, have plummeted by 13% to US$122,2 million in July from US$142 million last year on the back of a slowdown in deliveries.

“Gold, which leads tobacco as the country’s highest foreign currency earner, continues to shatter the country’s hopes of improving the liquidity crunch and
forex challenges as deliveries plummeted 27% to 15,08 tonnes from 20,7 tonnes during the first seven months of the year,” IH states.

“Of the 2,78 tonnes mined in July, large-scale producers extracted 0,93 tonnes against small-scale producers who contributed the remaining 1,85 tonnes.

A schedule of deliveries shows that the total amount of gold delivered to Fidelity Printers and Refiners, the sole buyer of the mineral, nosedived from 2,323
kilogrammes in May 2019 to just 1,658 kilogrammes in June.

Zimbabwe’s economy is in the throes of a recession and will contract by 5% this year. Demand is weak in the economy, the currency continues to lose value
against the US dollar, inflation is rising and the central bank does not have a credible plan to stimulate the economy.

In light of this, investors’ outlook on stocks is gloomy and they prefer to hold other asset classes to preserve value.

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