ZSE weekly review

Published: 29 October 2013

The week under review was characterised by improved trading activity with total turnover of $8.1m on the back of 40.4m shares compared to $5.0m on the back of 49.7m shares for the previous week.

Value traded rose 61.8% on the back of decent trades in heavy weight stocks. Delta, one of the blue chips remained unchanged at 135c after the company unveiled a new ready to drink milk based beverage called Supersip with a shelf life of six weeks in a market where most dairy products have a shelf life of three weeks.

Both indices traded weak with the industrial index closing the week with a 1.7% loss to close at 209.71 points whilst the mining index lost 8.5% to 47.48 points.

On a year-to-year basis, the industrial index is up 37.6% but the mining index has declined by 27.09%. Foreign trades resulted in net inflow of $1.64m with net purchasing dominating.

The liquidity crunch has resulted in a number of companies suffering due to weak demand and high finance charges which has resulted in some companies closing down in the worst of situations. Consequently, we have observed a deliberate avoidance of poorly managed companies with sellers dominating in those companies than buyers.

The VP Joice Mujuru is quoted in the local press having said that there is need for the government to secure lines of credit to revamp the economy and ease the liquidity crunch.

In our view, liquidity challenges will continue to bedevil the economy until long term funding is sourced. That said, we believe there are still opportunities on the ZSE for long term investors given the undemanding ratings for most counters and also the government's toned down approach on Indigenisation.

Nonetheless, it is likely that volatility will remain high hence we recommend investors take a long‐term view on their holdings.
- Imara Edwards Stockbrokers

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