[2008-10-06]  ZSE shares rise faster, alarm appears
LAST week the share market rose even faster but consternation appeared to set in towards weekend amid concerns of over priced stocks, in local value terms.

Stocks fell in Friday trading, as investors took profits. As had been predicted by this paper a day earlier, the market seemed too hot, and some shares corrected.

Even when in US dollar terms share prices are under-valued, investors pocketed profits Thursday and Friday and curbed the inflation led growth in share prices.

Also, the suspension of the Real Time Gross Settlement on Friday caused some little worry in the market, and curtailed equities growth.

At the close of trade Friday, the mainstream industrial index fell an estimated 13 percent posting its first daily loss in many weeks.

Minings dragged 5,3 percent after a $100 000 loss in nickel miner, Bindura that closed at $500 000.

Index figures could not be established because of the power blackout on Friday.

In Thursday trading, however, industrials rose 29,5 percent to 391 279 395.27 points but minings lost 12,59 percent to 251 797 026.57 points.

Average daily ZSE turnover fell below an estimated $700 billion from almost $1 trillion a few days earlier.

Volume declined to 5,3 million shares, down 235 percent from 17,8 million on Wednesday.

Total market capitalisation reached US$2.2 billion.

This represents a decline from previous figures of as much as US$3 billion three to four weeks backs.

What this may suggest is that in US dollar terms, the stock market is not moving, as fast.

It points more to inflation driven type of growth in share prices.

It would be worthwhile noting also that over the past five years, the stock market has not managed to match growth shown on the foreign exchange rate.

Its performance has exceeded inflation, but in real terms value growth has been negligible.

In the review week, equities rose faster helped by the free-fall of the local currency.

The Reserve Bank introduced new $10 000 and $20 000 notes on Monday and simultaneously raised the daily cash withdrawal to $20 000.

Now this precipitated an incredible rush in food and service prices whilst delays in announcing Cabinet after the conclusion of inter-party talks three weeks ago suffocated market confidence.

It then led to negativism on the future of the economy, and fed into the exchange rate spiral.

Equities followed similar patterns and rested in record territory.

In early Thursday trading there were signs of first tier shares cooling down despite weaker US denominated value.

Market markers like Old Mutual that usually decide the direction of the market fell. By end of trade, however, several shares gained and helped push the main index up 29 percent.

By end of day Thursday, the main industrial index was up 204 billion percent since January while minings had posted a year-to-date growth of 106 billion percent.

This compares with June-end annual inflation of 11,2 million percent, according to data from the Central Statistical Office.

Of the index shares Friday, only 16 shares gained, 24 declined and the rest traded unchanged.

ZSE newcomer, Trust Holdings Ltd lost $50 000 falling from its re-listing price of $300 000.

Many believed the counter had been artificially priced.

Heavyweights, OM fell $300 000, Econet ended down $200 000 while Delta finished lower $150 000 at $500 000.

On the increase, Natfoods led movers rising 51 percent while Fidelity Life, Pioneer and National Tyre Service all rose 33.33 percent.

The decline in equities is, however, expected to be short-lived.

There is no fundamentals supporting bearish trading on the market for any long periods in the current environment.
Source: THE HERALD