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ZSE subdued post 2020 budget trading


Following two weeks of subdued activity, the local bourse recovered somewhat during the week under review, amid renewed buying interest particularly in the real estate sector as well as blue chip counters.

Overally, activity remained largely constrained in the post budget trading period, as the market continues to trade sideways.

Marginal gains recorded during the last three days of the week were not enough to overturn the prior week losses. As a result, the All-Share Index eased 0.26% to close the week at 240.81 points, the Industrial Index lost 0.28% to end at 801.38 points, while The Top 10 Index shed 0.77% to settle at 216.29 points.

However, the Minings Index remained resilient, edging up 0.84% to finish the week higher at 344.42 points.

On a year-to-date basis, returns remain positive above 50%, albeit notably lower than inflation levels, thus yielding real negative returns.

Overall market capitalisation decreased by 45% on weekly basis to conclude the week under review at ZWL$31.23 billion.

Reflecting an overall market decline of 0.26%, heavy losses were noted in counters such as FMP, which lost 87.50%, Dawn weakened by 30.72%, and Truworths softened by 19.92%, while Ariston and Starafrica shed 12.51% and 10%, respectively.

Leading the Weekly gains were the following counters; ZPI up 29.5%, Masimba added 21.16%, Willdale rose by 20% and Edgars advanced by 1516%, while Zimre registered a gain of 15%.

In view of the continued inflationary environment, investor appetite remains skewed towards heavy weight and property counters in pursuit of safety and value preservation.

As a result, blue chip counters drove the weekly market turnover, led by Old Mutual which realised weekly turnover of $5.73 million, Delta recorded $3.58 million and Cassava –$2.08 million, while Padenga and Innscor completed the to five turnover value leaders.

In terms of volume, Willdale led the pack, followed by First Capital Bank, Medtech, ZPI and FBC.

Reflecting the prevailing difficult operating environment, most corporate trading updates are revealing falling sales volume, due to constrained consumer disposable incomes.

In subsequent trading updates, the cement manufacturer PPC Limited indicated that volumes at its Zimbabwe unit went down by 30% for the six months to September 30, 2019, compared to same period last year. Turnall also reported a decline of 31% in sales volume for the period ended 30 Sep 2019.

While Dairibord reported a decline of 40% for the third quarter, amid depressed consumer disposable incomes.

In an effort to stimulate aggregated demand, Finance minister Mthuli Ncube has proposed in his 2020 budget statement to reduce value added tax by 0.05% and review upwards the income tax bracket from the current $700 to $ 2,000., effective January 2020.

l Mutandani Makuyana is an equities analyst and head of research at Invictus Securities Zimbabwe
Mobile: 0773 043 672

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