Budget announcement spurs ZSE counters

response to the announcement of the 2012 National Budget.
Finance Minister Tendai Biti presented a US$4 billion budget that is expected to bring in a number of reforms in the mining sector, mainly on taxes.
On Friday, gains were recorded in Econet pushing US25c to US400c and Hippo weighing in with US5c to trade at US100c.
Econet then contributed US$1,9 million and Delta put in US$1,4 million on a total turnover for the week of US$6,2 million.
The resources counter finished the week at 118,06 points after shedding off 2,22 percent reacting to Government plans to increase royalties.
Both indices have continued to perform below the last quarter of 2009 and 2010. The mining index in particular has been disappointing, losing a marginal 23 percent since the beginning of this last quarter while industrials lost 8 percent.
Coal-mining firm Hwange largely drives the mining index. The counter has been the best performer followed by gold miners, Falcon Gold.
However, all mining counters are trading below their opening prices for the year.
Minister Biti announced that US$600 million is expected from diamond sales next year and contribute to the fiscus and this development is expected to give impetus to mining counters.
Government is also working on capacitating Fidelity Printers and Refiners thus gold mining firms are expected to benefit.
According to the African Development Bank report on Zimbabwe for November, the role of small-scale players in the gold mining sector is becoming more pronounced in the industry.
The bank says there has been a noticeable increase in small-scale activity in gold production since the beginning of the third quarter.
Total gold deliveries from the small-scale players increased from 126,5kg in June 2011 to 388,1kg in October 2011.
There was also a noticeable increase between September and October 2011, as gold deliveries by the small-scale players increased by 49 percent from 260,1kg in September.
The increase in deliveries in October occurred at a time when deliveries from the primary producers were shrinking compared to September.
Gold deliveries from the primary producers fell by 11 percent in October to 770,2kg. The proportion of deliveries attributed to the small-scale sector has generally been rising since the third quarter.
In June this year, small-scale miners contributed only 15 percent of output compared to over 50 percent in October.
The heavily capitalised counters have not shown significant upside with beverages maker Delta, Innscor and Seed Co gaining just about 10 percent of their 201 opening prices while Econet and Hippo have lost almost 20 percent of their opening prices for the year.
Delta has remained the biggest counter of the bourse with a market capitalisation of US$847 million with a year to date price movement of 10,8 percent.
The counter has failed to break the US$1 billion mark it was targeting despite its fundamental base.
Delta has failed to break past US80c spending the good part of the quarter trading between US70c and US75c.
The general low performance in share prices is a reflection of the significant selling pressure in shares across most sectors and the general low liquidity in the market.
Going forward, the market will finish the year and get into the new year in a liquidity crisis. Liquidity challenges and access to banking sector credit, which have constrained the recovery of the manufacturing sector, continue to weigh down on the industrial index.
Much of the activity is against the backdrop of investors taking hedge positions to preserve their investments.
For the fifth consecutive month, market capitalisation has been sliding and the decrease could be attributed to the low value of shares that presented compelling opportunities for foreigners.