[2008-01-24]  ZSE shares take hammering
The ZIMBABWE Stock Exchange plunged 15 percent yesterday, as banks took a hammering in otherwise light trading.

A handful other first liner stocks dropped too. Money market investment rates gained on liquidity shortages.

After hours yesterday, the main industrial index had lost 14,59 percent, or 317 220 625,08 points of its value, falling to fresh 2008 lows at 1 856 353 672,91 points.

The mining index slumped 18,29 percent to 1 978 639 500,76 points after losses in all counters with the exception of Halogen, which, however, had its offer price lowered to $40 million.

At close yesterday, average ZSE daily turnover dropped 64 percent to $4,1 trillion, as the equities’ volatility swayed investors to the money market where short-term deposit rates have gained vastly.

Volume, however, remained thin, with just over 16 million shares changing hands.

The biggest daily volumes, which precipitated the stock market’s downhill rush, were reported in the following counters:

CFX Financial Services — 5,8 million shares; NMB Bank — 2 million shares; Barclays Bank — 448 000 shares; OK Zimbabwe Ltd — 2 million shares; Old Mutual Ltd — 47 000 shares; PPC — 6 000 shares; and Hwange Colliery Company — 157 000 shares. At least 28 000 shares were traded in Kingdom Meikles Africa Ltd.

In value terms, trading in OM accounted for 19 percent of transactions yesterday, Hwange was 9 percent, CFX more than 5 percent while Barclays and OK accounted for 4 percent of the trading and KMAL trading made up 9 percent of the value

In yesterday’s trading, banks fell on weak sentiment after the Reserve Bank of Zimbabwe blasted the financial institutions for causing the current cash mayhem.

CBZ lost $150 000 to $750 000, CFX was $9 000 down at $36 000 and FBC shed $100 000 to $400 000.

Barclays, which traded $50 000 lower at $430 000, is set to open a new branch in Zvishavane while former managing director Mrs Charity Jinya will take up a similar post in Uganda.

NMB was down $30 000 to $110 000 on reports that it is failing to pay the outstanding individual Foreign Currency Account holders after the central bank revoked its foreign currency dealership licence in May last year.

The main news of the day yesterday was the ultimatum given to banking institutions to clear the queues or face the wrath of the central bank.

RBZ blamed banks for the persistent cash shortages after failing to collect money due to illiquidity stemming from non-core speculative practices.

There were rumours in the market yesterday that banks holding positions in the stock market sold off to boost liquidity but since most trading was in financial stocks, there was dumping of shares in non-financial counters.

Banks have, however, said that they are working flat out to clear queues although since it was the beginning of the year, 30 percent of the remaining reserves after the RBZ’s mandatory 50 percent was expected to be lent to the productive sector.

This left them with roughly 20 percent, which they have to secure for funding at RBZ for depositors.

Of the index shares, NatFoods fell $400 000 to $1,3 million. The group’s productivity rose 10 percent following the advent of the Bacossi facility. NatFoods says that capacity utilisation had gone up to between 20 and 30 percent from 10 percent.

CAPS Holdings shed $15 000 to $135 000. The group says that it has two ARV dossiers awaiting registration by the Medicines Control Authority of Zimbabwe.

Wildale lost $25 000 to $40 000 in heavy trading to lead the day’s fallers at 38 percent (negative). Barclays fell 11 percent, KMAL closed down 23 percent while Hwange finished lower 20 percent.

Rising interest rates also dragged equities. Money market rates gained on the current liquidity shortages.

Yesterday, dealers were quoting between 300 and 400 percent yields for short term and between 420 and 550 percent for 30-90 days.

Meanwhile, the Zimbabwe Stock Exchange could have lost in excess of $40 billion in gains turnover on Tuesday as no stocks were traded as a result of power cuts.

Stock market officials said yesterday although they had not yet arrived at the total amount the local bourse could have lost, calculations were being carried out "but the amount should not be less that $40 billion".

"It will be a huge loss," one official, who requested anonymity, said. "Here, we are not talking of anything less that $40 billion."

The stock market has churned out average daily revenue of $4 trillion since the New Year opened.

Gains turnover is the amount of money that ends up in the ZSE coffers, and not turnover from share trades.

Source: Copyright(c)2008 The Herald ltd.