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Investor activity lowly on the ZSE

WITH MUTANDANI MAKUYANA

Investor sentiment remained muted during the week under review, amid continued worsening economic situation. The Finance, minister Mthuli Ncube of projects Zimbabwe’s GDP growth a revised -6,5% in 2019. Meanwhile, investors continue to look for a safe haven for their investments, hedging against the prevailing inflationary environment. Inflationary pressures are expected to remain elevated in the outlook, underpinned by the continued depreciation of the local currency against the US dollar, increases in fuel and electricity cost, amid high inflation expectations.

The Reserve Bank of Zimbabwe was back in the market this week, floating another 365-day paper targeted for institutions and corporates to subscribe for $150 million worth of Treasury Bills following an under subscription of the previously issued $300 million paper last week. Once again, bids worth only
$72 million were received and allotted at an average rate of 15.4902%. The highest bid rate stood at 45% whilst the lowest rate was 12%. The under subscription reflects in part liquidity shortages in the market, amid dented investor appetite for longer term investments given the prevailing low return averaging 15%, which is yielding negative real returns.

The week under review saw the local bourse trading in a narrow range, ending the week marginally lower on weekly comparison. The All Share Index lost 0.76% to close the week at 231.38 points, and the Industrial Index shed 0.77% to end at 772.9 points, while the Top 10 Index dampened by 1.65% to settle at 215.18 points. The Mining Index was the heaviest decliner, shedding 7.84% to close lower at 278.28 points, dragged down by Bindura which lost 18.75% to end lower at 13 cents. Despite ending the week marginally lower, the market year to date return remains comparably higher to alternative markets: 365 Treasury Bills (averaging 15%, 3-month term average term deposit- 4.81%(RBZ weekly Economic Highlight-27 September 2019).

Leading the weekly gains were the likes of Medtech, up 38.48%, Dawn Properties gained 35%, and Dairibord firmed by 23.47%, while Mash and Art put on 20% and 19.05%, respectively. However, losses were posted in the likes of PPC, which shed 20.67%, Bindura lost 18.75%, Zimplow eased 7.93%, and First Capital Bank weakened by 4.76%, while Econet lost 4.38% to end at $1.7475.

Reflecting dwindling investor confidence, foreign investors remained net sellers during the week under review, as weekly foreign sales of $9.129 million (60%), outweighed foreign purchases which totalled $6.182 million.

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