Imara Edwards Securities weekly review

Published: 20 August 2013

The holiday shorted week was one of the heavily traded after deals worth USD 20.5m were closed during the three days. The cherry topping was provided by CBZH which traded 55.7m shares worth USD 8.4m on Friday as well as healthy structured deals in Econet and Delta.

Volume wise Art also contributed with stock amounting to 36.7m shares worth USD 0.2m. The bulk of the turnover was concentrated on the last day of trading but the week turned out to be the best so far this year, albeit on reduced days. However, momentum remains negative after three weeks of consecutive losses, the industrial index receded by 4.1% on the back of losses in midtier counters such as TA (-25%), Zimplow (-23%), Colcom (-22%), BATZ (-18.4%) and Edgars (-16.7%). The mining index lost a massive 17.1% on the back of losses in Rio Zim (-12.5%) and weaker bids in Hwange and Falgold.

The inauguration of the President has been penciled for Thursday 22 August 2013 after Morgan Tsvangirai pulled back his court challenge on the election results. Thereafter we will be looking forward to the composition of the cabinet and other appointments to be announced henceforth.

Fundamentally blue chip companies are sound, however we remain skeptic about the banking sector where withdraws have been steadily outpacing deposits. Market sources indicate that to date close to USD 0.8bn has been withdrawn from the financial system and the figure is expected to rise if bold pronouncements about the currency are not made timely. We continue to reiterate that investors take a contrarian strategy by taking advantage of the selling pressure to buy sound well managed companies with good fundamentals and stocks such as Delta, Econet, Seed Co, Ok Zimbabwe, Dairibord, and Innscor quickly come to mind.

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Imara Zim Research can be contacted at research.zimbabwe@imara.com

- Imara Zim Research

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