[2008-08-28]  ZSE Shares Riot
SHARES on the Zimbabwe Stock Exchange rioted on Monday on increased buying pressure and negative inflation. The industrial index doubled in value after all counters gained.

At close on Monday, the main index rocketed 122 percent to 180 879.07 points, its highest level ever.

Minings finished up 81 percent or 90 427.25 points at 201 446.02 points. All mining shares gained.

In early trading yesterday, the market traded mixed, as investors started taking profits.

Early gains were reported in Turnal up 170 percent followed by tobacco processor, BAT that rose 114 percent. General Beltings, African Sun and Gulliver all gained above 61 percent but below 100 percent.

Declines included market bellwether, Old Mutual that dragged 17 percent while Willdale, Falgold, Zimpapers and ZPI also lost some ground.

In Thursday trading, share prices went haywire in thick volume.

The market churned out more than $375 million worth of deals. Total market capitalisation rose to $2,5 trillion, more than double Friday's closing numbers.

The biggest daily increases were reported in property shares Pearl Properties and Mash Holdings, as well as Hippo and Natfoods that rose 300 percent each.

Last week, Pearl Properties reported half-year to June net profit of $10 quintillion (old value) from $3 trillion (old value) a year ago.

On a year-to-date basis, industrials have risen 95 million percent while minings are up 85,2 million percent.

But equities will have to play catch up with the foreign currency growth rate, as implied by the Old Mutual share -- a key indicator of the stock market direction.

The OMIR has swollen by over 197 million percent since January to $991 against the US$, as at August 25. It rose even faster in the past fortnight, as equity prices appeared posted slower growth.

This may also suggest there has been, in fact, serious capital getting into the foreign currency market -- mildly away from the stock market, from where all thought had become the biggest absorber of excess liquidity in the market.

Analysts expect that the stock market will continue trading firmer this week although investors may start pocketing profits in selected shares.

Results coming into the market for the June year-end or half-year are expected to prop up (or down) respective shares.

Negative inflation and forecasts will also play to the equities favour going forward. Annual inflation leapt to 11,2 million percent at the end of July.

Market watchers predict it would need a much more firm economic policy to really change the direction of the stock market.

Right now, obtaining economic fundamentals do not support sustained bearish trading on the ZSE. "The bullish trend is set to continue in the short- to medium-term with instances of profit taking halting the upward trend," explained an analyst with Kingdom Stockbrokers.

"However, any such profit-taking behaviour would be temporary since only a major shift in policies has the potential to stop the upward trend in the equities market."

Another analyst with Interfin Securities said: "The market is expected to post a positive weekly performance.

"However, profit taking is likely to cool down the upward momentum of the market from the mid-week to close. Selling out of counters that may have rewarded the investor seems to be the best strategy."

Investors should however target counters with strong balance and high foreign currency earning capacity, as they are better positioned to stand the test of time, analysts said.


Source: Allafrica