Online Reporter
The Herald, 5 January 1989
THE Zimbabwe Stock Exchange entered the New Year on a high note while the money market moved unexpectedly tighter, forcing the Reserve Bank to release $50 million of the $200 in special bills issued late in 1988 to mop up excess liquidity.
The money market remained tight on Tuesday, when the Reserve Bank successfully floated a $150 million Government stock issue, which was oversubscribed by about $33 million.
On the stock exchange, mining’s ended 1988 on a record high of 308,35 while industrials were also at a record level of 552,61.
This was the 12th time in December alone that the industrial index had broken through to a new record, sending out mixed signals about public investor sentiment amid the release of generally poorer results, except from companies such as Apex.
Observers believe this record activity on the ZSE was partly due to the shortage of good scrip and partly to heightened expectations that the price freeze will be sorted out soon while the new investment guidelines are also expected soon.
Mining’s have been boosted by generally continued good world prices and expectations of record export earnings last year.
The exchange started the New Year even firmer with mining’s rising 4.34 to 312,69 and industrials up 1,92 at 554,53 on Tuesday, the first trading day of 1989.
Reviewing these developments, the chairman of the ZSE, Mr Tom Williams was cautiously optimistic.
“Taking a positive view that the long-awaited investment code will be announced early this year and that justified price increases will be awarded promptly, this would be a morale booster to the economy and 1989 could be a good year for investors in the stock market,” he said.
“However, I do not subscribe to the belief that the stock market crash of October 1987 was a pause in the world bull market, but rather the first leg of a bear market and that the second leg could take place later this year, which could be bad for markets, including commodity and metal markets.
Lessons for today:
- The ZSE started the year on a high note, with record-breaking indices in December. Strong market performance often signals optimism about economic policies and future growth.
- The Reserve Bank had to release $50 million in special bills to ease tight liquidity. Our Central bank plays a vital role in stabilising financial markets through timely interventions.
- Despite record highs, some companies reported poor results, creating uncertainty. Investors should look beyond index performance and analyse fundamentals before making decisions.
dyton mupawaenda