THE local bourse continues to tumble on the back of damning statistics of national capacity utilisation, a report by an economic research group shows.
The unpalatable state of the economy for business was re-emphasised in the week under review after the Confederation of Zimbabwe Industries (CZI)
reported that the country’s capacity utilisation tumbled from 39,6% recorded in 2013 to 36,1% in 2014.
“This development comes against the backdrop of a difficult operating environment characterised by low demand and arising from a persistent liquidity crunch,” EFE Securities said in the report.
EFE said the result has been aggressive downsizing of operations by industry and in worst cases actual closure.
“The damning statistics saw the market extend its losing streak from prior week into the current with the main stream industrial index making it a straight set of five losing sessions in which a cumulative -2,23% was shed to see the index settle at 189,14 points,” the report added.
The five session losing streak also saw the index’s downward trek bring up eight successive losing sessions while extending the year to date losses for the main stream index to -6,42%.
Losses were also witnessed in the resources where the mining index fell by a similar margin to the industrials of -2,23% to close the week at 87,17points.
The drop in the minings follows a -12,5% softening in coal miners Hwange to 7c despite reports of the company receiving new equipment to boost operations.
Rio Zim also weighed on the minings after shedding 10% and closed at 18c ahead of a planned rights issue which is expected to be done at an offer price of 20c. The research group also reported an increase in foreign spending which spurred market activity.
A couple of block trades in Zimplow highlighted the trading sessions over the week helping the weekly turnover aggregate of $8,9 million to marginally surpass the prior week outturn by 3,75%.
“The turnover was achieved from trading in 60,52 million shares that were marginally lower than the previous week by -2.45%,” the report said.
Foreign demand remained the major source of liquidity on the bourse as inflows of $5,53 million were registered which represented 62% of the total spend on the market.
The total foreign purchases were, however, -15,47% softer than the total spend by foreign players in the prior week.
“Aggregate portfolio disposals took the hardest knock shedding -68,25% for the week and closing at $1,17 million being a mere 13% of the week’s value of trades,” according to the report.
Econet emerged the market favourite after accounting for 34% of the total value for the week while Zimplow was a surprise second with a 29% contribution thanks to the block trades.
Delta was the other notable most sought after stock as 21% of the total funds invested found a home in the beverages group.