Zimpapers Logo

Enacy Mapakame Bulls and Bears
THE equities market has largely remained subdued despite the presentation of the 2017 Monetary Policy Statement, which contained a cocktail of measures to bolster production and enhance investor confidence.

Reserve Bank of Zimbabwe Dr John Mangudya came up with policy measures to enhance banking sector stability, promote exports through extension of export incentive to cotton and tourism sectors as well as reducing bank lending rates, capping them at 12 percent per annum.

The apex bank chief also increased the gold support facility for small to medium scale producers to $40 million from $20 million to promote production of the yellow metal.

This initiative is expected to curb informal trading of gold and encourage deliveries to Fidelity Printers and Refiners.

Small to medium scale gold miners’ production share has increased to 48 percent in 2016 from 22 percent in 2003.

In the week to Wednesday, the mainstream Industrial Index see-sawed in either direction but eventually closed the week under review 0,74 percent weaker at 135,82 levels on losses in heavy cap counters and mid tiers.

Total turnover amounted to $2,360 million. Total market capitalisation declined 0,71 percent in the week to $3,790 billion.

The capital flight on the bourse continued as inflows were $575 178 against outflows of $1,671 million.

The market’s biggest stock by capitalisation, Delta was 1,21 percent weaker at 81 cents. Telecoms giant, Econet weakened 5,6 percent to 16,05 cents after it traded in the negative in Tuesday and Wednesday sessions.

Econet’s local and foreign LA’s (letters of allocation) which were listed on Monday are yet to record any trades.

Econet opened its rights offer on Monday and market watchers anticipate recovery of the telecoms firm’s share price post financial year 2018 as a result of the transaction.

But the prevailing liquidity challenges coupled with regulatory interventions and low disposable incomes are anticipated to continue resulting in revenue declines for financial year 2017.

Notwithstanding this, some equities analysts have recommended shareholders to follow their rights given the dilutive effect of the transaction. By not following their rights, they stand to be diluted by 45 percent.

This is premised on the assumption that this will allow shareholders guaranteed returns although the inclusion of debentures in the capital raise may not be popular among some shareholders. Market watchers forecast an ex-rights price of 13,24 cents.

In the week under review, hospitality group headlined fallers after it succumbed 15 percent to 8,50 cents as it investors await release of its financial results anytime soon.

National Tyre Services dropped 12 percent of value to 1,01 cents. Industrial conglomerate Innscor Africa Holdings Limited sunk 0,52 percent 47,75 cents while quick service restaurant service provider Simbisa was 2,06 percent weaker to 16,16 cents.

Seed producer Seed Co was 1,98 percent weaker to 99 cents while Cafca weakened 2,4 percent to 20 cents.

The engineering firm indicated at its annual general meeting that turnover for the four months to January 30, 2017 tumbled 10 percent below same period in the prior year on a 6 percent decline in volumes.

Due to pressure from cheap imports, Cafca’s margins fell 2 percent below.

Despite the weakness in the benchmark, the market was not short of risers. Meat processor Colcom rose 1,38 percent to 36,5 cents while cement maker PPC gained 0,85 percent to 59 cents.

Cigarette maker, BAT inched up a marginal 0,33 percent to $15,05 as it remains the most expensive stock on the bourse.

BAT yesterday reported after tax profit fell 45 percent to $8,48 million in the year to December 2016 from $15,4 million on lower sales volumes.

Revenue amounted to $34,1 million, 25 percent lower than prior year’s $45,3 million.

Afdis, Barclays, Dairibord and Edgars were unchanged at 60 cents, 2,30 cents, 5 cents and 4,80 cents.

The Mining Index gained a marginal 0,27 percent to 60,85 levels following a marginal increase in RioZim which inched up 0,45 percent to 32,65 cents.

The other resource counters, Bindura, Falgold and Hwange remained unchanged at 4 cents, 1 cent and 3 cents respectively. Apart from the 5 percent export incentive introduced last year, the RBZ has also shown support towards value added exports.

Elsewhere, gold production at Pickstone Peerless mine in Chegutu declined by 11 percent to 4 356 ounces in the quarter to December 2016 due on the back of increased rains that affected mining and milling operations.

Resources counters and other stocks such as Padenga, BAT and Ariston are expected to cash in on the incentives for value added exports which will eventually increase export earnings.