Zim Stock Exchange loses $400m

via Zim Stock Exchange loses $400m – DailyNews Live John Kachembere • 12 April 2016

HARARE – The Zimbabwe Stock Exchange market capitalisation contracted by 14 percent to $2,6 billion in the three months to March 2016 from $3,1 billion in December last year, as the country’s economy hurtles towards recession.

Latest figures from Lynton Edwards Stockbrokers (Les) show that the equities market traded lower in the first quarter to March 31, 2016, with the main industrials index losing 15,02 percent to 97,61 points, while the mining index was worse off, down 17,66 percent to 19,53 points.

“Turnover for the period of approximately $43,3 million was also 37,39 percent lower compared to the $69,74 million that was invested for the comparative prior year.

“Foreigners were net sellers having sold and bought shares worth $36,4 million and $19,6 million respectively,” the equities research firm said.

A total 33 counters including Bindura closed the period in red while 15 were positive.

In the three months to March, beverages manufacturer Delta Corporation lost 20,21 percent of its stocks while British bank Barclays Plc subsidiary Barclays Bank Zimbabwe share prices went down 34,12 percent.

Other notable declines were recorded in diversified conglomerate Innscor Africa 37,48 percent, National Foods 19,90 percent, OK Zimbabwe 30 percent and SeedCo 23,58percent.

Telecommunications giant Econet Wireless and insurance giant Old Mutual, however, closed the period on the upside with a gain of 15,84 percent and 8,28 percent respectively.

Les noted that the ZSE’s first quarter performance is to be expected given the economic fundamentals on the ground.

“The business operating environment is characterised by tight liquidity and weak aggregate demand that has resulted in falling volumes despite price reductions,” Les added.

The country’s annual inflation for February shed 0,03 percentage points to  negative 2,22 percent from the January rate of negative 2,19 percent.

The year-on-year food and non-alcoholic beverages inflation prone to transitory shocks stood at – 4,04 percent while the non-food inflation rate was –1,35 percent.

Negative inflation was recorded in most of the categories particularly housing, water, gas and electricity.

Annual inflation has remained in negative territory since October 2014.

“The prediction by government that the country will record a 2,7 percent gross domestic product (GDP) growth rate, mainly on account of mining, tourism, construction and financial sector might not be achieved given what is prevailing on the ground.

“We do not expect much growth from the mining sector which we believe to be vulnerable to fluctuating primary commodity prices,” the research firm said.

Commodity prices especially for minerals have continued to retreat since early 2011 and the growth of the Zimbabwean economy will slow down significantly as a result.

“We believe the mining sector’s contribution to GDP will be undermined by reduced revenues from mineral exports, combined with low levels of investment in the sector,” Les added.

Market experts also assert that alleged policy inconsistencies have resulted in investors and companies cutting back on spending on new projects and employment.