[2008-07-28]  Equities market volatile on investor uncertainty
ZIMBABWE Stock Exchange shares traded volatile last week, as investors consternated over economic future in face of the political talks.

At the close of trades on Thursday, the mainstream industrial index was down 7 percent at 140 669 921 068 715 points, paring gains reported since Monday.

The mining index extended losses started Tuesday, falling 1,82 percent to close at 176 519 171 711 525 points on the day.

Average ZSE daily turnover reached $929,1 trillion, up from $314 trillion reported a week earlier.

Total market capitalisation at $1 967 394 trillion was up from $801 218 trillion a week ago, helped by the share price rush on Monday, which pushed higher ZSE value by almost half. Wide industrial index gains notched at week opening gradually eased into fractional increases later in the week.

While the talks for a government of national unity involving Zanu-PF and the two MDC formations have raised new hope for political and economic change, there are roaring undercurrents that have kept the scepticism amongst investors running.

This coupled with negative annual inflation of over 2,2 million percent and the free-fall of the exchange rate has sustained the equities rally. In last week’s trade, it was not much of a rally, however.

Investors stayed put, preferring instead to watch events, particularly on the political play-field unfold from a distance.

Since the talks covenant was signed a week ago, there has been this sort of uneasiness, uncertainty even amongst the usual speculators. The street market rate for the US dollar has shivered; prices have not stabilised but — the rate of increases has moved a step away from abnormal.

In the review week, equities traded volatile with weaker losses reported mainly on the industrial index while the main index posted marginal gains.

In Monday trading, the main index gained 48 percent to reach an all-time high of 117 650 502 340 532.00 points.

The index rose 24,5 percent on Tuesday before pushing up a marginal 3,1 percent at midweek, as signs of profit taking started creeping into the market.

Minings nearly doubled on Monday climbing 79,1 percent to new records at 192 101 371 419 562,00 points. On Tuesday and Wednesday, the index dragged 2 percent and 4,4 percent in that order.

In the four days to Thursday, the main index is up 82,2 percent while minings posted a growth of 64 percent. Industrials are up more than 6 million percent on a year-to-date basis and the resource more than 8 million percent.

Of the index shares Thursday furniture group Pelhams paced advancers rising to more than $1 billion followed by Hunyani that rose 40 percent.

Chemco gained 38 percent while Celsys and FBCH each inched higher 29 percent.

Of the ZSE shares property counters fell most. Pearl Properties led decliners falling to $22 billion from $36 billion followed by Dawn that ended down at $15 billion from $20 billion. Financial counters CFX and NMBZ shed 32 percent.

Going forward, the future of the stock market will largely depend on sentiment, inflation outlook, and now the outcome of the GNU talks.

Low interest rates will also continue playing in the equities favour, as well as the depreciating currency.
Source: (C) 2008 THE HERALD.