Stock market bullish ahead of polls

Published: 27 July 2018

Zimbabwe Stock Exchange (ZSE) acting chief executive officer Martin Matanda says demand for stocks has been rising especially in bluechip counters such as Delta, Econet and Old Mutual over the last few days due to increased investor appetite.

In emailed responses to NewsDay, Matanda on Wednesday said the market cap and indices were rising.

"The indices and market capitalisation show a rising trend suggesting that share prices have generally gone up in the period. Demand has been strong in the ZSE top 10 stocks and in particular in Delta, Econet and Old Mutual," he said.

"The relationship of the trend to elections is attributed to increased investor appetite in equities at a time when money market rates are generally depressed. Due to uncertainty in the election season, investor interest appears to be leaning towards shares and property."

Analysts say the share value in Delta and Econet stock could rise further with the former committing $250 million to recapitalisation over the next five years this week and the latter entering the short-term insurance market with Econet Moovah.

With Econet Zimbabwe's entry into short term insurance, the company now has its hands in different sectors of the economy including banking, telecommunications and energy.

For Old Mutual, the company is benefitting from an unbundling meant to unlock shareholder value that saw the holding company moving its primary listing from the London Stock Exchange in the United Kingdom to the Johannesburg Stock Exchange in South Africa.

This is expected to unlock shareholder value by freeing the local company to strengthen its focus on Africa.

As of yesterday, the share price in Econet was 126,36 cents, Delta (215,01c) and Old Mutual (500c).

In local firm IH Securities weekly recap ending July 23, the industrial index closed the week 10,39% higher at 394.35 points, while the mining index rose 0,53%, ending the week at 164.28 points.

Trading in heavyweight counters was also firmer during the period, with Econet, Delta and Innscor gaining 16,39%, 16,36% and 12,19%, respectively. However, the week's top earners were Meikles, Turnall and OK Zimbabwe, up 34,30%, 20,00% and 17,37%, respectively.

The performance on the main bourse comes despite stock brokers assuming the market would remain bearish on the back of uncertainty over next Monday's elections.

"I am not sure why it is being assumed that ZSE will be bearish as a result of the forthcoming elections. As can be seen, the market is rising possibly due to increasing RTGS money supply, low money market rates, currency uncertainties and inflation forecast. The equities market provides acceptable shelter in these conditions," Matanda said.

But, in the week ending July 23, the biggest losses were recorded in Lafarge, down 3,7% and RioZim which was down 0,84% in trading.
- newsday

Tags: Polls,