4 February 2013

Zimbabwe: ZSE Stocks Record Solid Run

THE Zimbabwe Stock Exchange enjoyed a handsome bull run last month, largely supported by strong foreign buying, mostly in heavily capitalised counters. Some of the stocks that have had a solid run

include Delta Corporation, Econet Wireless, British America Tobacco (Zimbabwe), Innscor Africa and OK Zimbabwe.

As of Friday last week, the industrial index had risen by 19,41 percent from 152,40 points on December 31, 2012 to 181,98 points while the mining index gained 29,40 percent from 65,12 points to 84,07 points during the same period.

Last week alone, the mainstream industrial index amassed 13,82 points (8,22 percent) while the mining index of the four trading shares added 6,66 points or 8,6 percent as investors cheer the positive developments on the political front.

The ZSE is trading at its highest level since dollarisation and analysts expect the strong rally that closed 2012 to proceed into 2013 as the global economic outlook improves.

The vibe coming out of the domestic politics has somewhat ushered confidence among investors while, to a certain extent, compliance with indigenisation law by the big foreign-owned companies has regenerated the interest of foreigners.

According to analysts, election talk, political rhetoric and misconceptions on indigenisation impacted investor sentiment in 2012.

The indifferent performance of the stock market was reflective of developments in the local economy as well as the eurozone where sovereign debt issues remained unresolved and the US fiscal cliff remained a work in progress.

Although inflows were impacted by these issues, returns in the so-called frontier markets remain attractive and a recent rebound in stock prices are indicative of global funds taking position ahead of an expected better upturn in the global prospects this year.

Trading during 2012 was highly segmented with the top counters doing well while bottom companies such as Cairns were struggling and the company was put under judicial management and indications are that it could be liquidated.

There are other similar listed companies on the bourse and they continue to suffer from massive undercapitalisation, high levels of gearing, poor corporate governance structures and poor management. Foreign interest has thus been waning on most listed stocks except on the blue chips such as Delta, Seed Co and Econet, BATZ, PPC Zimbabwe and OK Zimbabwe which have been actively traded.

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