ZSE weekly review

Published: 24 September 2013

The industrial index continued to advance after gaining 2.2% in the week under review, with significant gains recorded in TA Holdings (+50%), CFI (+44%) and Turnall (+31%).

It appears that the overall sentiment on the market has largely been positive after the announcement of cabinet. Nonetheless, turnover for the week declined by 21.6% to $6.8m from $8.7m in the prior week with Delta, Econet and Innscor being the dominant contributors to value traded.

Internationally we saw the US Federal Reserve continuing with its $80.0bn bond buying which has helped in driving the equities markets to record highs.

However, the impending sequester pose a huge threat to the recovery of the US economy. Regionally markets were largely mixed as investors digested the information coming out of the US economy ahead of the 1 October 2013 deadline for the budget cuts to kick in.

In the face of a decline in banking deposits in June 2013 indications coming from the Ministry of Finance are that the multi-currency regime will be maintained for the foreseeable future.

The Minister of Finance emphasised economic recovery as a precondition to the return of the local currency. Given the uncertainty regarding the immediate recovery of the economy we advise investors to take positions in the Fast Moving Consumer Goods sector which is defensive and counters like Natfoods, Innscor and DZHL will quickly come to mind. Food retailers like OK Zimbabwe and Meikles through TM Supermarkets are also expected to offer defensive characteristics in the face of a stagnating economy.

On the beverage sector Delta is expected to be a dividend play and on the telecoms we expect Econet to be the major value driver. Seed Co remains a dominant player in seed business and we expect the company to be well placed especially after the likely conclusion of an impending transaction.
- Imara Edwards

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