[2008-03-10]  ZSE shares tumble, halting gains
ZIMBABWE Stock Exchange shares tumbled at close last Thursday, halting gains started since February 18, as investors took profit from a market that has recently shown no respect for gravity.

After hours on Thursday, the main industrial index was down 10 percent or 6 733 202 645.10 points at 7 576 889 275.51 points after more than 60 percent of ZSE stocks slumped.

Minings dropped heaviest on the day, falling 17 percent to 5 789 120 535.14 points following a 33 percent loss in nickel miner, Bindura.

Volume remained thin, suggesting several punters are still eyeing an immediate comeback.

There was more selling pressure in second liner shares. Heavyweight stocks traded mixed and a few other industrial, financial and retail counters rose.

Several stocks traded in the red in early morning trade on Friday, and the market appeared set for another decline on the day.

On Thursday, average ZSE daily turnover closed down at $66,02 trillion falling from $81,2 trillion a week earlier.

Total market capitalisation, however, doubled to $110 043 trillion from the week before, helped by rapid price increases seen earlier in the trading period.

For the week, the main index gained 49,8 percent and is up 296 percent on a year-to-date basis.

Minings rose 29.4 percent week-on-week, but has grown at a much slower pace than industrials on a year-to-date basis, rising 145 percent since January.

Analysts believe Zimbabwe is yet to gain the full benefits of the rally in international commodity prices, which have seen gold, platinum and nickel reaching record levels.

Rampant acts of smuggling, loss of production due to consistent power shortages, and the general lack of capital expenditure have stung the domestic mining sector.

During the review week, the Reserve Bank announced the launch of the third phase of the farm mechanisation programme, which will release additional liquidity to a market already in surplus.

Money market surpluses have hit upwards of $500 trillion, sending short-term deposit rates to the ground.

Interest rates on deposits of tenor 3 months and below are being quoted between 10 percent and 50 percent per annum, which stands against Zimbabwe’s yearly inflation of 100 000 percent in January.

The weak rates have thus played into the hands of the stock market, whose returns over the past half-decade have phenomenally surpassed inflation.

Of the index shares on Thursday, industrial conglomerates, Astra and Radar paced movers rising 20 percent each, the most notable movers in a largely bearish market.

ABCH, which releases its results later this week rose 18 percent followed by Lafarge, formerly Circle Cement that gained 13 percent along with clothing retailer Truworths.

Insurance giant, Old Mutual remained steady at $70 million, as PPC dropped 19 percent to $110 million.

Starafricacorporation rose to $2,2 million after Interfin Securities increased its rating for the sugar producer to buy.

Interfin sees a mid-term price of $8 million on starafricacorporation.

The stockbrokers have also raised to buy its ratings on TSL, Cottco and Zimnat.

Of the ZSE shares Thursday, furniture group, Pelhams and Innscor, the giant fast foods dealer led decliners falling 38 percent apiece to close at $50 000 and $12,5 million respectively. Powerspeed and NMBZ traded weaker 37 percent and 32 percent in that order.

The results season has now come in full swing. Last week, Fidelity Life, Old Mutual, Barclays Bank, TSL and Hunyani all released earnings.

The earnings are expected to add or remove some value to respective company stocks.

Over the outlook period, the stock market is forecast to remain on the upside particularly backed by weak interest rates. Profit taking will occur occasionally, and investors must choose their portfolios with the help of the current financials coming into the market.

Source: (c)copyright 2008 The Herald ltd.