Punters lose US$96m in February

via Punters lose US$96m in February | The Sunday Mail 6/3/2016

Enacy Mapakame
THE Zimbabwe Stock Exchange further plunged in February, with punters losing US$96 million worth of investments as the market shaved 3,4 percent of its total value in the month to US$2,69 billion.
In a predominantly seller’s market, the industrial index fell 2,8 percent to 99,5 points.

Year-to-date, the index is down more than 13 percent, and has dropped 40 percent for the year – falling faster than its regional peers.

In the same month, the mining index eased two percent to 19,14 points as falling commodity prices continue to affect the appetite for mining stocks.

Minings have fallen 19,3 percent since the beginning of the year. Investors continue to be unnerved by negative economic growth projections and the current deflationary pressures.

The year-on-year inflation rate for the month of January – as measured by the all items consumer price index – was – 2,19 percent from the December rate of -2,17 percent, while month-on-month inflation was -0,05 percent, according to the Zimbabwe National Statistics Agency.

Company earnings have failed to drive the market.

Earnings from Cafca, BAT and Afdis continue to show both falling volumes and demand.
However, heavy weight counters such as Delta, Econet, African Distillers, Innscor Africa and retail giant OK Zimbabwe bucked the down-trend, as cumulative trades in the counters topped US$13,7 million.
General Beltings Holdings Limited was the top gainer for the month, firming 100 percent to USc0,02 followed by Old Mutual, which rose by 5,9 percent to close the month at US$1,80.

Electrical products and services provider PowerSpeed Electrical Limited also performed well after the company successfully negotiated for a redeemable debenture of US$2,5 million for the next two-and-half years that will allow it to convert short-term borrowings to long-term borrowings.

Cafca Limited led decliners, losing 43 percent of value to close at USc22,45 followed by Masimba Holdings Limited, Proplastics Limited and Truworths Limited, which eased 22 percent, 21 percent and 20 percent respectively.

Spirits and alcoholic beverages maker Afdis was among the biggest losers.

Brokerage firm IH Securities contends that the bearish trend will continue throughout the year in the absence of any catalyst to spur the market.

“We anticipate sustained pressure on consumer demand and a continued squeeze on liquidity,” said IH Securities in a research note.

The brokerage, however, noted that the bourse may not be all gloomy and investors ought to “keep an eye on earnings stabilisation as valuations appear to be coming back to attractive levels”.

IH Securities tips well-capitalised companies like beverages maker Delta and diversified industrial giant Innscor on account of their continued strategies to unlock value.

Simbisa is also being primed for growth owing to its regional diversity and expansion.

Added IH Securities: “Our immediate preference this time is companies that have de-rated significantly from their five year historical per averages assuming relatively stable forward earnings.

“Our belief is that the downward momentum in earnings in these names has decelerated and will begin to level off in late 2016.”