The Herald (Harare)
3 November 2009
Harare — THE mainstream industrial index last week declined 12,7 percent, the biggest fall since trades resumed in foreign currency in February.
The mining index also slumped 22,2 percent during the week as uncertainties on the political front crippled the local bourse.
There has also been an insignificant inflow of new money following the announcement by Prime Minister Morgan Tsvangirai that his party was partially disengaging from the inclusive Government.
Latest developments have resulted in the easing of the market from the previous week's market capitalisation of US$4,5 billion to US$4 billion.
On Friday, mobile phone operator, Econet led the shakers dropping US19c to US530c, Old Mutual retreated US7c to US164c and Colcom fell US6c to US19c.
"If this continues, we expect the market to settle at US$3,5 billion. The interesting thing though is that very few businesses are affected fundamentally as the business environment has not been adversely affected in any direct way.
"Therefore, one can use this opportunity to buy discounted stocks, depending on their upside potential," one analyst said.
Only five counters rose during the week, with Nicoz, Steelnet and Truworths rising 66 percent, 25 percent and 9 percent to US1c, US0, 1c and US0, 1c respectively.
Interfresh led the losers, shedding 67 percent to close the week at US0, 5c. Zeco and Tedco both dropped 50 percent to close at US0, 5c each.
Recent developments in the equities market have proven how investors have become sensitive to some political developments in the country.
Politics has a direct bearing on economic policies, let alone for Zimbabwe, which is just coming out of a decade of political turbulence.
Tension, anxiety and uncertainty gripped the equities market, largely dominated by foreign investors upon news that the inclusive Government was under threat of collapse following the disengagement of MDC-T led by PM Tsvangirai,
A recent survey undertaken by the CZI on the manufacturing sector from third quarter records indicated an improvement in capacity utilisation and activity across the sector.
Hope had started to build up once again as local companies began producing and employment levels were stabilising.
Of essence now is for how long will this growth trend be sustainable with the recent episodes on the political arena. However, some brokers said investors should take this opportunity to grab quality stocks that have succumbed to recent market forces.
Of note will be CFI, TA Holdings, Colcom, Hwange, PGI and M & R. All medium to long-term investors are expected to continue accumulating food and agro-related counters.
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