Sundaymail Editor
Enacy Mapakame
Stocks recovered last week stoked by fears of negative inflation forecasts as investors move to hedge against inflationary pressures.
All the benchmark indices closed the week to Thursday in the positive, but investors are concerned about the runaway parallel rate of foreign exchange fuelling a spate of price increase.
Last week, the Zimbabwe National Statistics Agency (Zimstats), released figures showing month on month rate of inflation for August 2019 slowing to 18,07 percent after shedding 2,97 percentage points on July’s 21,04 percent.
Although monthly inflation fell in August, the surge in exchange rate bodes for prices going forward.
In the week to Thursday, foreign currency exchange rate on the illegal parallel market shot to as much as 1:20 against the USD resulting in spike in prices of selected goods and services. Typically, the Zimbabwe Stock Exchange (ZSE) firmed as investors hedge against the future value loss from inflation.
Economic uncertainties, inflationary pressures and exchange rate weaknesses have historically triggered a stocks rally. On the contrary, prior last week, the market’s performance had remained subdued with investors losing billions within a month before it started to recover again in the past week.
While the month on month inflation in August does not necessarily mean prices of goods went down, on the contrary, they continued to rise, but at a much slower rate than the prior month (July). After close of Thursday, total market value added 6,7 percent of value to $23,066 billion sustained by gains mainly by the market’s heavy cap counters.
The Industrial Index was also 6,7 percent firmer to 589 points, while the primary indicator, the ZSE All Share Index gained 6,6 percent to 176,99 points. At 160,37 points, the market’s elite club, the ZSE Top 10 Index was 7,8 percent above prior week level, while the Mining index of two active counters closed the week with a marginal 0,3 percent gain.
Of the top capitalised stocks, diversified financial services group, Old Mutual, paced the fastest with a 56 percent increase to $28,10 after reporting revenue for the half year to June 30, 2019 jumped 741 percent to $2,4 billion from $290,7 million previously, but emphasised that the current interims have been prepared on a historical cost basis.
Crocodile breeder, Padenga, put on 16 percent of value to $1,79 while the market’s biggest counter by capitalisation, Delta ticked 9 percent to $3,20.
SeedCo rose 10 percent to $1,60 while Innscor and Econet put on 6 percent to $1,96 and 4 percent to $1,25 respectively.
Fintech group, Cassava was, however, in the negative with a 1 percent decline to $1,22 after its mobile money platform EcoCash suspended over 4 000 of its agents on allegations of participating in the now rampant trend of charging excessive premiums for customers intending to cash on their mobile money.
Cash shortages started in 2016, and this coupled with inflationary pressures are anticipated to further weaken consumer spending.
Online Reporter