Economy / 3 February 2016, 07:30am / Tawanda Karombo
Harare - Market turnover on the Zimbabwe Stock Exchange (ZSE) tumbled by a massive 30 percent last month, prompting analysts to project flat corporate earnings throughout this year as the country battles a severe economic downturn.
The bigger stocks on Zimbabwe’s bourse include the unit of SABMiller, Delta Corporation, Econet Wireless, sub-Saharan Africa focused stock-feeds and consumer goods manufacturer Innscor Africa, among others.
Despite previous strong foreign investor interest in Delta, January was subdued for most stocks on the exchange.
Activity on the ZSE last month was markedly depressed, with turnover dropping by 30.37 percent to $11.36 million (R181.03m) and average daily trades for the month at a lowly $568 000.
The ZSE’s overall market capitalisation for January was 8.45 percent on the previous month at $2.94bn.
Lloyd Mlotswa, a research analyst at IH Securities in Harare, said yesterday: “The market has maintained an almost 12-month downward trend since February 2015 as it fell once again last month.
“As a result, we anticipate corporate earnings will remain relatively flat in 2016.”
The industrial index was weaker at 103.04 points, “weighed down by losses in Delta, down 24.98 percent and Innscor, down 320.91 percent”.
This negated an 8.91 percent gain in telecoms group, Econet Wireless.
The mining index retreated 17.66 percent to 19.53 points last month, with nickel mining and refining group Bindura Nickel Corporation dropping by 34.64 percent.
An announcement this month by RioZim, which now majority controls the Murowa diamond mine, that it was set to expand production could breathe some life into the mining index, market traders said.
Finance Minister Patrick Chinamasa said Zimbabwe’s economy would grow by 2.7 percent this year after growth fell to 1.5 percent last year.
The growth projection for this year has been premised on expected growth from mining and tourism, as well as stability in the financial services and banking sectors.
“There are significant downsides to government forecasts – emanating from adverse weather patterns, as the rainy season started late and weakening commodity prices, in particular metals – (which are) likely to result in the economy underperforming.
“Inflation closed the year at minus 2.57 percent as the deceleration reflected price corrections, tight liquidity, depreciation of the rand against the US dollar and weak aggregate demand,” IH Securities said. “Inflation is expected to stay around zero in 2016, mainly as a result of the appreciation of the US dollar amidst the increase in interest rates.”
Market capitalisation on the ZSE had declined by about 30 percent last year, starting off at $4.37bn in January and closing the year at $3.1bn.
The ZSE said last month that the total value of shares traded during the year had dropped from $453m in 2014 to $228.6m.