By Dumisani Ndlela and Omega Ukama
THE equities rally on the Zimbabwe Stock Exchange (ZSE) showed no signs of flagging, with the benchmark industrial index rising 10,32 percent to a new record 347,63 points yesterday and the market capitalisation coming just short of $10 billion.
Market capitalisation, which closed last week at $8,12 billion, soared to $9,8 billion yesterday, and looks set to break through the $10 billion barrier within the week. Yesterday’s charge was led by seed manufacturer, Seed Co, which gained $0,3825 to settle at $2,3050, while beverages group, Delta Corporation added $0,2607 to $22,234.
It’s associate, Afdis, went up by $0,1975 to close at $1,2000. Sugarcane producer, Hippo Valley Estates advanced by $0,1100 to trade at $1,3100, while crocodile farmer, Padenga, put on $0,1097 to close at $0,9977. Telecoms giant, Econet Wireless Zimbabwe was $0,1075 higher at $0,7711. The mining index joined the rally yesterday to settle at 84,56 points after gaining by 2,87 percent. It had been flat at 82,20 points on both Monday and Tuesday.
“Most investors are panicking,” said Welcome Mavingire, a financial analyst, explaining the bull market. “Investors are just thinking about the hyperinflation of 2008 and hoping to keep their investments in equities.” He said stocks were now “way over-valued”, and feared many investors could become casualties of a future correction. “Some investors are blindly buying shares without valuing. They are simply trying to avoid the money market in case of hyperinflation,” he said.
Simbarashe Mangwendeza, a research analyst at Old Mutual Securities, said there was “panic flight” from the money market over fears of hyperinflation. “There is a lack of confidence in money held in banks,” he said. Equities analyst, Ranga Makwata, said investors were concerned about value erosion in the wake of rising inflation and currency risks in the economy. Banking sector sources and fund managers said former safe haven investments in the money market had become the bull market’s biggest casualties, but indicated the securities-linked investments appeared to have suffered minimal harm.
Investors fearing the risk of capital loss had invested in the money market following stability brought about by a hard currency regime in 2009 when government officially ditched the domestic currency to break out of hyperinflation. Depositors have been failing to withdraw cash from banks, which are now flooded with local currency created by the central bank but reflecting as US dollars on bank statements. Government borrowing has mopped up greenbacks from the financial system, replacing US dollar balances with real time gross settlement (RTGS) payments generated by the Reserve Bank of Zimbabwe.
Pearly Properties rebranded yesterday to First Mutual Properties to take the identity of parent firm, First Mutual Holdings, also listed on the ZSE. An announcement by the company said new share certificates would be issued as and when the company’s shares are traded on the bourse. An unidentified shareholder bought 18,8 million Pearl Properties shares on Tuesday at four cents per share. email@example.com