THE mainstream industrial index dropped 80 000,06 points inside a week as bank shares reeled from profit taking from risk-averse investors expecting the worst from recent central bank measures targeted at financ
The stock market, which has been in the red for over a week, has been subdued due to a spell of central bank measures aimed at mopping up excess liquidity on the money market and curtail speculative activities in the economy.
The industrial index, which was at 407 651,14 points on Wednesday last week, closed at 327 645,08 points on Wednesday this week while the mining index shed 34 559,21 points to close at 138 100,82 points during the same period.
Analysts said the market could experience a crush on the back of an acute shortages on the money market expected to spark a sharp rise in rates which could force investors to pull out their investments from the equities market.
The Reserve Bank recently introduced Financial Sector Stabilisation Bonds (FSSB’s) and Economic Stabilisation Bonds (ESBs) whose take up is pegged against financial institutions’ balance sheets.
The bonds will significantly mop up cash from the money market. Analysts estimate the bonds to squeeze out of the market at least $230 billion.
A bank economist said there were strong indications the equities market would be subdued until December, saying investors were already awaiting budget proposals before taking further investments decisions in a directionless market.
“The market is expected to be bearish ahead of the fiscal policy, but for long term investors it is the ideal time to buy shares. The current sell is rendering the market cheap and ripe for position taking,” said David Mupamhadzi, group economist with the ZABG Bank.
He said apart from the fiscal policy, and the recently introduced bonds, December traditionally brought bearish sentiment on the bourse.
On Wednesday, the Reserve Bank floated ZTB OMO Bills, with a tenor of 91 days and $50 billion was on offer. The tender closed yesterday, with tender allocations expected today.
The money market was on Wednesaday short to the tune of $12,4 billion, with yesterday’s position forecast down to the tune of $5 billion. Ninety day NCD’s were indicated unchanged on Wednesday at between 125% and 150%, while Call rates were also quoted the same at 5%.