[2008-07-07]  Stocks recover 28pc from a two-day sell off
THE stock market recovered on Friday to close the week green-faced largely on the back of a 116 percent gain in KMAL.

THE stock market recovered on Friday to close the week green-faced largely on the back of a 116 percent gain in KMAL. At close the industrials index put on 7,46 percent to 32 740 830 388 795.10 points and the minings index was up 20,33 percent to 42 420 577 746 297,30 points driven by gains in Hwange, Bindura and Halogen. The overall market capitalisation in US dollar terms was $3,7 billion. The two-day 29 percent and 38 percent sell-off in industrials and minings, which occurred midweek, were not very significant and do not compare to previous gains on the market. The trend on the stock market has mainly been the same over the past month with share prices hitting bottom during Thursday’s afternoon trades and Friday while Monday’s trades are generally characterised by bidding and low volume trades. The market moves significantly on Tuesday’s while Wednesday’s shows early signs of profit taking. Investor sentiment turned weak soon after the hike in rediscount rates to 9 500 for unsecured and 8 500 secured by the central bank’s governor, which would normally point to firmer investment rates. Over the years we have crossed the line from maintaining a healthy optimistic economic outlook to cynically regulating information in boldfaced contradiction of reality, moves of which are sometimes purely academic. However the money market is still highly liquid (because of tobacco payments and the rest of the familiar Government expenditure stories) and rates are not expected to significantly. Those who rushed to sell would have gone into hard currency whose rates stalled in the week owing to a cash squeeze. However there are mistakes associated with converting stocks into cash "presumably as a safe haven." On the surface it might look good since cash is not actually losing money but in this unpredictable environment the returns might not be as good for long term investors. It pays not to be exclusively in cash when things turn economically or otherwise. In some counters on the bourse there has not been relative returns in US dollar terms perhaps prompting some to favour the hard currency market. The two however move in tandem and I stand corrected but I think its not necessarily wise to sell cash and move back into the stocks. On the price sheet, KMAL led the risers after putting on $116 billion to $216 billion taking its market capitalisation to $52,4 quintillion or US$462 million. Halogen led for the miners after putting on $43 billion or 75 percent to $100 billion. Zimnat led the fallers shedding $700 million or 46 percent to $800 million.



Source: (C)2008 THE HERALD