THE Zimbabwe Stock Exchange (ZSE) industrial and mining indices dipped during the first quarter of this year on the back of losses recorded on some counters that were listed on the local bourse.
BY VICTORIA MTOMBA
Statistics show that the industrial index went down by -4,16% end of March to close at 156,01 points compared to December 2014 when the index stood at 162,70 points.
According to MMC Capital, the negative momentum was on the back of losses in selected heavy weight counters. “Econet lost 17% to 50 cents and Natfoods gave up 9% to 310c, Innscor was down 8% at 55c. Partially offsetting the losses were gains in SeedCo which gathered 6% to 103c. OK Zimbabwe 12c accumulated 4% and Delta climbed 3% to 105c,” MMC capital said.
Cigarettes manufacturer, BAT closed the quarter 4% higher at 1,160c. The mining index, which has been on an upward trend since last year buoyed by the performance of Bindura Nickel Corporation, took a huge knock to 34,93 points from 71,71 points.
The mining index has four counters that include Bindura Nickel, Hwange, Falgold and RioZim. “All mining counters recorded losses in the first quarter. Bindura (7c) lost 38%, RioZim (7c) slipped 53%, and Falgold (2,5c) eased 29%. Hwange share price was 17% weaker at 4c,” the research firm said. Total market capitalisation for the local bourse stood at $4,12 billion during the quarter review compared to $4,33 billion in 2014, while aggregate market turnover stood at $69,74 million compared to $118,67 million achieved in the same period last year.
“Our view is that activity on the local bourse will remain depressed for the greater part of this year as the bulls continue to search for a new lease of life. Economic indicators such as inflation, savings rate, money supply and trade balance continue to show that the economy is indeed running out of steam,” MMC Capital added. The destruction of the middle class would make it difficult for the economy to rebound as has been witnessed in the country since it is the main source for the growth of the economy.
In its quarterly review, MMC Capital said aggregate demand in the economy was waning and questioned where demand was coming from.
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“Mostly (demand is coming) from the spending of middle-class consumers. It is the middle-class consumer that creates the incentive to conceive, manufacture and sell what the economy produces. It is the middle-class consumer that creates the business opportunities that spur investment. The middle-class is the heartbeat of the economy,” the research firm said.
