Stock market sluggish as investors await budget presentation

THE stock market needs stimulation from the policies that Finance and Economic Development Minister Patrick Chinamasa will announce in the 2014 national budget, economic commentators have said.
Minister Patrick Chinamasa is expected to present the fiscal policy statement on Thursday.
In separate interviews, economic commentators said of late performance of the ZSE has been sluggish to a certain extent due to delays in the announcement of next year’s national budget with investors adopting a wait see attitude on how Government would implement policies that encourage investment.

At present, they said the stock market needs a lift from the 2014 national budget.
“Trading on the ZSE has been subdued largely because of liquidity constraints on the market. Of late, trading performance on the ZSE has been worsened by delays in announcement of the 2014 national budget. Investors are waiting to see what policies will the Government come up with to promote investment in the country,” said Peter Mhaka.

For example, as part of the sluggish performance on the ZSE on Thursday last week, the sell-off pressure was mainly in Delta that came off a cent to 145 cents in trades worth $49 000 and Innscor, which weakened by 0.49 cents to trade at 76.50 cents.

Retail chain, OK Zimbabwe dropped 0.80 cents to 21 cents with very few trades. Losses were also recorded in Zimplow that pared 0.20 cents to three cents while hotel group, African Sun dropped 0.10 cents each to 2.70 cents. Brick manufacturing firm, Willdale lost two thirds of its share price to trade at 0.05 cents.

However, on the upside, cement producer PPC Zimbabwe recovered five cents to 245 cents while NMB traded two cents higher to seven cents.

Turnall was 0.50 cents in the positive to close at 5.50 cents while Econet inched up 0.01 cents to trade at 62.01 at cents.
Turnover was a low at $465,000.

The mining index was 0.90 points lower at 42.87 points after Bindura shed 0.10 cents to 1.90 cents.
An economic commentator, Wendy Mpofu said Minister Chinamasa faces an acid test of announcing a budget whose policies will attract investors and boost performance of the stock exchange.

“One of the reasons why performance on the ZSE has been sluggish in the past few weeks has to do with delays in the announcement of the fiscal policy.

“Investors have become jittery, waiting to see what policies will government announce to spare growth of the economy and attract investors,” she said.

An economist with a leading financial institution who preferred not to be named said: “As long as the forthcoming budget does not have policies that promote long term funding, investment are likely to remain jittery on the stock exchange.”

Meanwhile, the ZSE was already working on plans to introduce a bond market next year as it seeks to provide a platform for long term funding to both public and private sectors. A bond market is a financial market where participants issue new debt, known as primary market or buy and sell debt securities.