Stock exchange rebounds after govt u-turn
The Zimbabwe Stock Exchange (ZSE) last week ended its losing streak as trades rebounded across the board from Wednesday following reports that government would relax its empowerment policies to improve the investment climate.
Reports had suggested that government was working on amendments to the Indigenisation Act, which would scrap the vendor financing model and replace it with a clause allowing it to take over 51 percent shareholding in foreign controlled companies at no cost.
Later on Wednesday, Empowerment Minister, Saviour Kasukuwere denied that the amendments would be effected immediately, this helped the bourse to rebound as confidence returned to the ZSE.
The ZSE had opened the week flat as foreign interest on the bourse had continued to be affected by the empowerment laws and impending elections, which are expected later this year.
Techfin Research said although the ZSE firmed during the review period, activity on the local bourse had remained mild as a result of continuing liquidity shortages on the market.
“On a weekly comparison, the local bourse finished higher, compared to the close of the previous week, with the key industrial index advancing by 0,16 percent to finish at 188,94 points, while the mining index powered on 5,70 percent to settle at 71,00 points,” said Techfin.
Last week on Monday, the industrial index was a marginal 0,06 percent lower at 188,52 points while the mining index jumped 6,45 percent to 71,50 points after Falgold put on 59,84 percent to 16 cents.
Falgold’s parent company, New Dawn, said its quarter-on-quarter gold output went up two percent in the quarter ended March 2013. In the wider market, stocks traded mixed.
On Tuesday, a rally in a few blue chips including Delta Beverages, failed to get the stock market out of negative territory after Econet’s loss and other second tier counters weighed in on overall performance.
Turnover was slightly better than the previous day but still remained below US$1 million, at US$830 820. The industrial index was down 0,08 percent to 188,37 points. The market recovered on Wednesday.
In a report on the banking sector by Econometer Global Capital, ZSE acting chief executive officer, Martin Matanda, said the local bourse did not expect new listings this year due to low activity on the market as investors were concerned with the impending elections.
“Only key drivers such as the elections and foreign investors have the ability to bring better prospects on the market. Investors had adopted a wait-and-see attitude ahead of the scheduled elections to be held this year,” he said.
Matanda said had it not been for the participation of foreign investors on the local bourse, the ZSE could have closed two years ago. The ZSE has been struggling to attract new listings since 2009.
However, Matanda was optimistic the local bourse would reach US$5 billion market capitalisation by year-end from about US$4 billion last year.
It is estimated that the market would register a 17 percent growth to US$5, 7 billion this year, amid expectations that in the post-election period, government would bring positive economic policies.
Despite decent parcels exchanging hands in ZPI, Afre and Econet turnover remained below US$1million at US$971,516 on Thursday. This week, the stock market opened higher after selected heavyweight counters managed to eke out marginal gains in trades characterised by high turnover.
At close of the market on Monday, total transaction value was at 1,77 million from 6,38 million shares traded. The industrial index was at 189,64 points gaining 0,37 percent. In minings, RioZim was unchanged US45 cents but the index closed with a gain of 1,38 percent to 71,98 points. Financial Gazette
