ZSE weekly review

Published: 29 April 2014

The market was characterised by meaningful activity with well structured trades going through in a holiday shortened week. Special bargains in Seed Co and Dairibord were the highlight of the week resulting in a weekly turnover of $17.98m. Nonetheless, the volume traded closed 9.3% lower at 62.44m.

The industrial index closed at 170.34 points, adding 3.4% buoyed by an increase in Econet (+3.39%), Innscor (+3.31%) and Old Mutual (+3.67%).

The Mining index gained 3.7% to close at 29.88 points as a result of a 3.85% gain in Bindura. In our view foreign demand is beginning to creep up, however unclear policies especially on the indigenisation and empowerment front continue to dent foreign morale.

The price of tobacco is reported to have improved on the back of better quality tobacco being brought to the auction floors vis-a-vis quality received in the beginning of the season.

Prices for the golden leaf are expected to continue rising as a result of the majority of growers reaping upper leaf which attract better prices. The season has recorded 96m kgs of which an impressive 92.7% came from contract farming.

Although the performance of the bourse has largely been negative, we believe the market is showing signs of recovery especially in some over sold blue chips.

Technical indicators such as the Moving Average Convergence Divergence (MACD) and momentum indicators are showing that the market is now in the over sold category and the current price levels are good entry levels. We urge investors to take positions in blue chip stocks namely BATZ, Delta, Econet, Padenga and Seed Co which appear over sold.
- Imara Edwards Securities

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