Zimbabwe: ZSE Race Rolls Unhindered

Source from:  The Herald (Harare) 5 November 2007 11/06/2007

The Zimbabwe Stock Exchange race rolled unhindered last week on increased capital inflows from investors short of options for other attractive investments. Most share prices rose sharply in the last trading week with the two indices - industrial and mining - reporting straight gains in the five days of trade. In Friday trading, gains in large capitalised stocks pushed the mainstream industrial index up 5 percent or 16 509 285,61 points to 346 886 078,25 points. Sharp gains in gold miner RioZim and Halogen also helped the mining index finish 5,3 percent or 20 605 592,21 points higher at 409 018 188,74 points. For the week, the key index was up 20,7 percent or 60 000 percent on the year. Week-on-week, the mining index put on 39,4 percent, faster than September monthly inflation at 36 percent. On a year-to-date basis, the resource index has gained almost 100 000 percent. Average ZSE daily turnover dropped 4 percent in Thursday trading to $1,46 trillion. Total market capitalisation fell 5,1 percent to $4,116 trillion Thursday but rising from October 15 figure of $2,062 trillion and $3,504 trillion on October 26. The two indices were extending gains started in the previous four weeks inspired by negative annual inflation numbers that climbed to a record high 8 000 percent at the end of September. Negative real returns on the money market have also added shine to the share market, as risk-averse investors maintain a hands-off attitude on interest-bearing assets. In real terms, money market yields rank below zero when compared to inflation. Asset managers are quoting rates of up to 200 percent on deposits of 60 days and 90 days while some are not taking deposits of tenor two weeks or below. Other 7-14 day instruments are yielding interest rates in the range 50 percent to 100 percent. This compares with monthly inflation that added 26,6 percentage points to 36 percent in Septem-ber. On Monday, the main index was up 1,6 percent, adding 2,71 percent on Tuesday before rising beyond the psychological 300 million-point mark Wednesday. On the day, industrials jumped 6,4 percent and on Thursday rose 4,1 percent. Rioting international commodity prices have kept the fire on the mining index that reported steep increases throughout the week. Minings opened the week up 7,1 percent, added 0,71 percent the following and closed up 3,58 percent on Wednesday. The index leapt 18,53 percent on Thursday before rising 5 percent at the end of trade Friday. Of the index shares on Friday, insurance giant Old Mutual paced advancers, rising $1 million to $6 million followed by cement maker PPC that finished up $800 000 at $8,8 million. Tobacco processor BAT gained $600 000 to $3,1 million while struggling timber producer, Border Timbers rose $38 000 to $220 000. Other significant gains were reported in Barclays, Tractive Power and Hippo Valley. Red Star ended down $1 000 at $3 500 after reporting on Wednesday half-year pre-tax profit, which lagged behind national inflation. Turnover for the group however grew 11 222 percent to $1,4 trillion. starafricacorporation lost $2 000 to $37 000. The group reported a turnover of $3,2 trillion on the back of a 43 percent contribution from its wholesale division Of the ZSE shares, chemical firm, Chemco led decliners dropping $50 000 followed by CBZ down $25 000 at $125 000. Kingdom and Innscor finished lower each $10 000. In minings, investment company, Halogen surged $3 million to $4,5 million followed by gold and diamond producer RioZim that gained $390 000 to $4 390 000. Nickel company Bindura rose $300 000 while Hwange and Falgold closed up $50 000 each. Going forward, equities are expected to continue running firm until year-end on the back of negative inflation and expectations, as well below inflation yields on the money market. Equities plus property market and foreign exchange market are the only real assets whose returns have managed to beat inflation. The trend is expected to continue until such a time when the authorities rein in inflation. Enditem