ZSE weekly review

ZSE weekly review
Published: 18 March 2014
During the week under review, the bourse recorded subdued activity with only seven counters recording decent volumes. Market turnover closed the week 19.3% weaker at $7.6m on the back of 42.65m shares compared to $9.4m on 241.47 shares for the previous week. Telecoms giant, Econet closed the week at 64.99c, down 3%, but accounted for $3.6m of the total value traded. Blue chip stocks, OK Zimbabwe traded unchanged while Delta and Innscor traded 0.50% and 2.04% lower, respectively. A special bargain of 8.2 million Pearl Properties at 2.61c was traded during the week. The Industrial Index lost 1.4% to 186.22 points as a result of losses in Barclays, Delta, Hippo and Innscor. The Mining Index dropped 3.5% to 33.16 points on losses in Hwange (-16.67%).

Zimstat released inflation statistics indicating a 90 basis points decline in the country's year-on-year inflation to negative 0.49% in February from 0.41% in January 2014. This is an indication that prices as measured by the all items consumer price index (CPI) decreased by an average 0.49 percentage points between February 2013 and February 2014. The m-o-m inflation was at 0.05% from 0.14%, a sign of disinflation which is given credence by a slowdown in credit as indicated by RBZ monthly report which indicated that total credit to the private sector was down 2.3% in January 2014. The country has for the second time since dollarisation entered into a period of price correction. However, the prolonged price correction is threatening to be a fully fledged deflation if it persists for three consecutive quarters fuelled by high rates of unemployment, declining wages, decline in consumer spending power and an ongoing appreciation of the green back against the rand.  The country is still struggling to come up with a strategy to revive the economy.

The results released this far show a very difficult operating environment. We expect this trend of subdued results to continue for the better part of 2014. Although the economic growth has slowed we believe that the ZSE offers value especially for long term investors. In our view, investors should take positions in companies with strong balance sheets, dominant market share, solid management and good fundamentals such as BATZ, Delta, Econet, Padenga and OK Zim.
- Imara Stockbrokers
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