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Forex earnings set to push industrial index


Conrad Dube


EXPECTATIONS on June year-end and December interim results and exchange rate review will catapult the industrial index to the 400 000 point mark in th

e next few weeks, analysts have said.


An investment analyst with Kingdom Stock Brokers (Pvt) Ltd said: “We do not see the market easing in the foreseeable future. The results reporting period for June year-ends and December interims should supply the market with the additional momentum to keep it running.”


Analysts say stock brokers were likely to take positions in agro-industrials and exporting counters ahead of the reporting period.


“Key factors to further enable the index and characterise stock selection during the period would be the company’s pricing power and export earnings potential,” he said.


The analyst said high domestic inflation gave rise to negative real deposit rates, thus discouraging people from placing funds, on a long-term basis, in the banking system.


Savings deposit rates currently range up to 15%, compared to inflation levels of 300%, as of May 31 according to the Reserve Bank of Zimbabwe (RBZ) June 6 weekly economic highlights.


“As a result, investors have shifted asset portfolios, more towards inflation hedges in the stock markets, which is mirrored in increased activity on the Zimbabwe Stock Exchange (ZSE),” the RBZ said.


The investment analyst said there could be a re-rating and revaluation for financials and agro industrial exporters based on past performances and “if the market believes that they can grow 2002 earnings”.


The industrials index ended Wednesday this week at 302 830,70 points an increase of 196% from the January 2 level of 102 434.36 while the mining index appreciated by 706% to close at 52 633,10 points on Wednesday.


The main index was buoyed by gains in counters such as ZSR which increased to $150 on Wednesday from $11 on January 2, an increase of 1 264% during the six months. Bindura appreciated by 1 230% to $665 from $50, Border recorded a 1 175% increase to $510 from $40 and Falgold increased to $49,75 from $4,50 to record an increase of 1 006%.


The bullish run was also spurred on by counters such as Chemco which appreciated by 704% to $2 050 from $846 and Radar which recorded a 686% increase to $265 from $28 as at January 2.


During the past week, 58 counters advanced, 20 counters retreated and one counter remained static.


Exporters recovered strongly, in the last six months, on the back of the implementation of an export incentive exchange rate, and manufacturers demonstrated resilience in light of the economic challenges.


At an export rate of US$1:$824 exporters reported exchange gains in the results released during the six months to date.

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