The benchmark industrial index dipped by 7,46% to $487,93 due to losses in heavy caps Delta and PPC, the second consecutive day the Zimbabwe Stock Exchange (ZSE) recorded a loss after the military stepped in on Wednesday to arrest the deteriorating economic conditions.
BY NDAMU SANDU
The mining index was down 2,69% to $134,40.
Yesterday’s dip on the industrial index was led by losses in Delta, Edgars, PPC, Bindura and Lafarge Zimbabwe. Delta dropped 19,96% to $2,5450 Edgars dipped 19% to $0,0520 while PPC was down 17,20% to $2,7297. Bindura and Lafarge dropped 10% to $0,0450 and $1,4400 respectively.
The top gainers were Proplastic and RioZim which added 11,84% and 0,21% to close at $0,0850 and $1,2000 respectively. The industrial index had dipped 1,28% on Wednesday.
Investment analysts told NewsDay yesterday to expect more bloodbath if the ongoing developments are viewed in positive light by investors.
“Share prices are, fundamentally, a reflection of how market participants see the future. Before this week, the future looked very inflationary with continued and accelerating devaluation of the ZW$ [bond note and Real Time Gross Settlement balances]. So this was priced in. This week, the future looks different. We may have an influx of investment and see the ZW$ trade at 1:1 with the US$. In such a future, the market is seriously overvalued at today’s prices,” an investment analyst said.
“The bad news had been overpriced at current prices so unless you expect even “badder news”, then a correction is due.”
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Another analyst said the ongoing developments “are cautiously viewed as having potential to yield positive results for the country”.
“If that is the case, then the freefall on the bond notes and RTGS values against the dollar will abate, if not reverse in form of the exchange rate strengthening. It, therefore, means asset bubbles created by panic buying will burst and prices will ‘correct’,” he said.
The analyst said the rally experienced in the last couple of months was largely driven by a combination of bad news, bank balances devaluation and pressure to move out cash to safer jurisdiction.
“Market values now are totally disconnected to the listed companies’ earning capacities. In real dollar terms this market cannot support valuations of $5 billion in market cap,” he said.
The market cap was $13 893 801 372 yesterday. “The thin volume is a sign of the few buyers; it’s a buyers’ market.”
