market report:WITH MUTANDANI MAKUYANA
The Zimbabwe Stock Exchange (ZSE) market displayed mixed sentiments during the week under review, in the absence of major fundamental developments to drive activity. The week under review saw the International Monetary Fund revising the country’s GDP growth prospects to a negative 7,1%, while it projects inflation to conclude the year 2019 high at 182.9%. Despite continued price hikes witnessed over the period, Zimstat official inflation figures show that monthly inflation has slowed since June 2019. After hitting a record high of 39.3% in June 2019, the monthly inflation receded to 21.0% in July and further slowed down to 18.1% in August, before it settled lower at 17.7% in September, 2019. In view of this trend, the Finance ministry has projected monthly inflation to end the year 2019 lower, at 10%. However, the continued depreciation of the local currency and the resurgence of a runaway away in US$ parallel market rate will sustain inflationary pressures.
The local bourse further traded sideways during the week under review, and finished mostly lower on weekly comparison. All the major ZSE indices ended the week in the red, save for the Mining Index which firmed 11.46% to end the week higher at 310.18 points, buoyed by a notable gain of 17.9% realised in Rio Zim. In terms of value, the ZSE market cap declined by 1.68% on weekly basis to end the week lower at ZWL$29.78 billion.
Leading the top performers’ pack, were the following counters: Ariston which gained an impressive 48.24% to end the week at $0.1260, Masimba put on 19.94% to close at $0.1600, and Rio Zim advanced by 17.90% to settle at $2.5703, while Star Africa and Seed Co added 16% and 10% to end at $0.0290 and $2.200, respectively. Offsetting the weekly gains were losses posted in the likes of Willdale, down 13.70% to $0.0397, Turnall lost 13.04% to finish lower at $0.1000, and Innscor dropped 9.11% to $2.800. PPC and Econet shed 7.84% and 5.55% to close at $3.100 and $1.6505, correspondingly.
Heavy weight counters drove the market in terms of turnover value, led by the fungible Old Mutual which contributed $14.7 m (44%), followed by Delta ($10.62 m) and Padenga ($3.89 m), while Innscor and Cassava weighed in with $2.87m and $1.97m, respectively. Leading the market in terms of volume were counters such as Mash Holdings (37%) Delta (28%) Cassava (13%, Axia (12%) and Econet (10%)
In the absence of major fundamental developments, the direction of the market is expected to be determined mostly by speculative behaviour, while the continued inflationary environment should see free funds continue to look for safety.
l Mutandani Makuyana is an equities analyst.
(Head of Research- Invictus Securities Zimbabwe)
Mobile: 0773 043 672