[2008-03-03]  Zimbabwe Stock Exchange shares break record levels
ZIMBABWE Stock Exchange shares last week burst through record territories inspired by a wide range of factors — negative money market rates, solid financial results and routinely weak inflation forecasts.

At the close of trade on Thursday, the main industrial index leapt 21 percent or 865 245 715,05 points, and broke the 5-billion ceiling for the first time ever.

The index finished firmer at 5 057 836 305,70 points shrugging off weaknesses reported earlier in the week.

All but six counters gained on the day with faster growth seen in second-liner stocks.

On Thursday, the mining index jumped 15 percent to new all-time highs at 4 474 637 206,78 points helped by gains in Hwange and Bindura that each climbed 20 percent to $7,2 million and $18,5 million respectively.

Average ZSE daily turnover rocketed 441 percent to $81,2 trillion from $15 trillion in the week ago period.

Total market capitalisation gained to $55 291 trillion from $38 476 trillion on Thursday of the previous trading week, valuing the ZSE seven times more than Zimbabwe’s cumulative 2008 Budget of $7 800 trillion.

Week-on-week, the main index rose 71 percent, and is up 165 percent on a year-to-date basis, which stands against January month-on-month inflation of 120 percent.

The mining index has risen 89 percent since the start of the New Year, and last week gained 78,3 percent.

Equities opened the period under review on a high note. On Monday, the key index rose 27 percent but fell 7 percent on Tuesday on weak sentiment. It marginally recovered 1,51 percent in midweek.

At week opening, shares jumped 41 percent, rose 1,5 percent the following day before losing 4,4 percent on Wednesday.

There were no major economic events in the week. Some companies, however, started releasing their December year-end or half year results.

Murray and Roberts, Old Mutual, Cafca, Hunyani and Zimnat all released earnings in the period under review.

Half-year profit at M&R, the giant construction group rose to $1,3 trillion from $2,1 billion from a year earlier. The stock closed 67 percent higher at $1,5 million on Thursday.

Old Mutual finished at $60 million after reporting funds under management gained to £278,9 billion.

Electric cable manufacturer Cafca rose to $2,7 million, paper producer Hunyani fell to $470 000 while Zimnat remained unchanged at $500 000.

Of the index shares on Thursday, starafricacorporation paced advancers with the sugar producer rising 82 percent followed by Interfresh that gained 67 percent. Cottco climbed 60 percent and new listing Zeco Holdings rose 54 percent.

Of the ZSE shares, only six counters fell. Agro-industrial equipment supplier Zimplow dropped 12 percent followed by financial group ZB Financial Holdings that closed slower 10 percent.

General Beltings lost 8 percent while Tractive Power and Fidelity each dragged 6 percent.

On the money market, short-term deposit rates crashed after the market finished $414 trillion up.

Most asset managers were not quoting rates on investments of 30 days and below while 60-day and 90-day paper averaged 50 percent.

The higher surplus position on the money market has taken the flavour from interest rates, as high inflation, at 100 000 percent at the end of January, also combined forces to spite interest-bearing investments.

The free capital in the market has sought refuge on the stock market, as an inflation hedge, and helped push stock prices through roof levels.

Until Government withdraws its Baccosi and Aspef facilities in June — the two major funds that have financed the manufacturing and agriculture sectors at interest rates next to nothing — the money market is expected to remain in surplus.

This, coupled with negative inflation, is predicted to drive equities even higher in the short term.

Intermediate profit taking will occur on the stock market, but the short-term outlook remains largely upside.

Finance Minister Dr Samuel Mumbengegwi estimates December 2008 inflation at 1 978 percent. The market forecasts numbers 50 times as much.
Source: (C)copyright 2008 The Herald ltd.