[2008-01-21]  Stock exchange recoups losses
ZIMBABWE Stock Exchange shares collapsed under some serious profit taking last week, but managed to recoup early losses at week close.

During the first four days of trade, investors sold off en masse, as investors searched for glory elsewhere.

This glory was actually nowhere, however. It remained with the stock market, as investors started buying again on Friday.

In Friday trading, the main industrial index recovered 5,51 percent to 2 198 221 433,97 points in volatile trading, shedding severe losses which started on Monday.

The mining index closed fractionally up 0,95 percent at 2 222 546 980,79 points, capping a week in which it has risen up and down in indifferent fashion.

At the close of trades on Thursday, ZSE average daily turnover dropped 15,6 percent to $7,7 trillion, but was up from last week’s closing level of $5,2 trillion.

Total stock market capitalisation gained 3 percent to $27 444 trillion, but was down from $30 000 trillion at close in the week ago period.

Industrials lost 0,30 percent on Monday; 7 percent on Tuesday before slumping a further 8 percent on Wednesday. The index closed down 1,07 percent on Thursday.

During the review week, minings were in volatile trading. Monday, the index rose 10 percent and fell 1 percent on Tuesday. Minings fell 2 percent at midweek before gaining 3,6 percent on Thursday.

In the week, the Reserve Bank announced the introduction of new higher denominated notes — $1 million, $5 million and $10 million.

The new notes were expected to ease the running cash shortages in the market.

However, there were no major changes in the cash situation by Friday, when the new notes came into circulation, as banks reported weaker allocations from the central bank.

On average, banks were being allocated $1 trillion. Most of them reported these figures were quickly exhausted on panic withdrawals.

The stock market also witnessed the listing of new conglomerate Kingdom Meikles Africa Ltd, at an initial price of $20 million.

The stock, however, received a baptism of fire days after that, falling to as low as $12 million, as the bears took control of the market. It recovered at week close, however, to $16 million.

In the medium term, the current equity weaknesses must not be viewed as permanent, but an anticipated feature of any other market. What goes up, will surely have to come down one day.

But those with extra cash bought, and continue to buy. Buying during such weak periods makes much more sense, as they say a stitch in time saves nine. Returns will turn sweet when the bulls return, which is not long from now.

Essentially, equities are backed by the absence of attractive investment options. High inflation, now estimated by the International Monetary Fund at 150 000 percent, will continue playing up shares. Shares are a perfect hedge against inflation in such times.

Of the index shares on Friday, Delta paced advancers rising 38 percent. Gulliver rose 38 percent too followed by Interfresh that closed up at 33 percent, Cottco 29 percent and Hippo up 25 percent.

Econet, which denied eyeing a stake in chrome producer, Zimasco picked up $1 million to $8,5 million.

Chemco was steady at $18 million after its October year-end financials last week. The group, which reported turnover amounted to $772,7 billion from $3 billion in the comparable period is expected to grow its Farm-a-rama brand by opening three outlets in the next 3 months.

Of the ZSE shares, Nicoz Diamond led decliners falling 27 percent followed by PG Industries and Colcom that lost 11 percent each.

Heavyweights, PPC shed $2 million to $26 million while Old Mutual was steady at $17 million.

In minings, Bindura gained $1 million to $9 million while Falgold and Halogen 13 percent and 10 percent respectively.

Source: Copyright(c)2008 The Herald ltd.