7 December 2017

Zimbabwe: Market Awaits 2018 Budget

TURNOVER was low on the Zimbabwe Stock Exchange this week as investors exercised caution while waiting for the 2018 National Budget amid signs that foreign interest in local stocks was being rekindled.

Weekly turnover since Thursday last week amounted to $24 million which is way below the market's standard as seen over the past 10 weeks. The rough average for weekly turnover over the past 10 weeks was $40 million.

An analyst with a MMC Capital, Kudzanai Samudzi, said the low turnover this week was a result of investors taking a wait and see approach as the nation waits for the 2018 budget set to be presented by the Minister of Finance today.

"Trading activity was relatively lower, with trades being concentrated in a few blue chip stocks. Our view is that a lot of investors were seeking further policy direction from the 2018 National Budget, hence the wait and see approach. Pronouncements will likely be very material and the direction of the market will hugely depend on the outcome of the policy measures. Key inputs in equity valuations, in order to ascertain whether to buy or sell stocks, are driven from such," said Samudzi.

Foreigners were net buyers in all of the ZSE's trading sessions since Thursday last week. Foreigners bought shares worth $5,22 million during the period under review and disposed of holdings amounting to $1,93 million equating to net purchases of $3,3 million. This could be a sign of foreigners' confidence in the new political dispensation.

The industrial index lost 7,79 percent to close yesterday at 342,15 points following weekly losses in major counters. Delta lost 21,4 percent week on week since Thursday to close yesterday at $1,5569. Econet shed 6,95 percent to settle at $1,0975. Old Mutual was down by 19,76 percent during the week to close at $4,7974 while Innscor dropped 0,39 percent to close at $1,0957.

Offsetting the losses were gains in selected counters. SeedCo gained 18,66 percent week on week to close at $2,0937. Larfarge picked up 10,38 percent to trade at $1,3798 while Barclays was up by 7,62 percent to trade at $0,065. The mining index gained 4,54 percent during the week to close yesterday at 132,46 points following gains in Bindura Nickel Corporation and Riozim of 20 percent and 0,16 percent to settle at $0,0426 and $1,1999 in that order.

Market capitalisation decreased by $800 million during the week to closer yesterday at $9,82 billion.

newsdesk@fingaz.co.zw

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