30 January 2013

Zimbabwe: ZSE Rally Continues

THE Zimbabwe Stock Exchange rally continued yesterday with the industrial index advancing on gains in blue chips, but the mining index fell on significant losses in RioZim. After trades, the mainstream index rose 0,42 percent or 0,72 points to 171,97 points while the resource index lost 2,5 percent or 1,96 points to 76,90 points.

Turnover was slightly lower at US$1,57 million from US$1,8 million a day earlier.

Tobacco processor British America Tobacco (Zimbabwe) gained US10c to US470c ahead of this year's tobacco selling season which starts on February 13. Since January 3, the tobacco company - the ninth biggest company on the ZSE in terms of value - has risen 28,7 percent. It is among the blue chips that have maintained an upward trend.

Old Mutual rose US4,9c to US180c, Seed Co advanced US1c to US78c while Delta Corporation maintained an upward trend after gaining US0,76c to US119,02c.

Delta, the biggest company in value terms, has risen 21,4 percent since January 3.

Fidelity Life marginally gained US0,5c to US12,5c. The gains were partially offset by losses in Meikles Limited which dropped US0,6c to US33c and Astra which fell US0,5c to US5c. Barclays and DZHL dropped US0,01c each to US3,6c and US21c respectively.

RioZim lost a significant US5c to US50c. Other mining shares traded unchanged.

Market analysts say the strong rally that closed 2012 could be maintained this year as the global economic outlook improves.

"We expect the strong rally that closed 2012 to proceed into 2013 as the global economic outlook improves," said Imara Edward Securities in its economic review for 2012 and 2013 outlook.

"However, head winds remain . . . as the economy remains hugely undercapitalised with most companies still weighed down by huge and expensive debt. The long-term growth potential of the economy remains strong and the stock market will mirror the growth pattern in the economy," added Imara.

Last year, the industrial index recorded a mixed performance after gaining 4,3 percent compared to a loss of 3,6 percent in 2011.

The mining index fell 35 percent year on year, but this was a slight improvement on the 2011 loss of 49,8 percent.

The industrial index's marginal gain was bolstered by modest gains in the blue chips - Delta, Econet Wireless, BAT and Innscor - whereas the mining index suffered due to insipid performances from Bindura Nickel Corporation, Hwange Colliery Company and RioZim.

Analysts say the "indifferent" performance was due to the "deep-seated" liquidity crisis, the eurozone crisis and the fiscal cliff in the US.

Market capitalisation closed the year at US$3,9 billion, mainly due to Delta's influence after closing the year at US$1,2 billion, representing 30 percent of the market.

Other blue chips recorded modest gains with Econet up 12,5 percent, BAT 143 percent and OK Zimbabwe 50 percent.

Total turnover at US$448,2 million was 6 percent down on 2011 and foreign participation dominated both the sellers and buyers.

Overall foreign participation accounted for 81 percent of trades at an average value trade of US$1,7 million per day.

Unlike in 2011, foreigners were net buyers in 2012 while foreign buying accounted for 47 percent of average daily turnover.

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