Equities open year in the red

HARARE - Zimbabwe's equities market opened 2014 in the red with only one counter trading in the positive as analysts claimed there were little prospects of fresh listings in the new year.

In yesterday’s trade — the bourse’s first in 2014 — the benchmark industrials index shed 0,06 percent to close at 201, 99 points while the mining indicator traded flat at 45,79 points as resources counters, Bindura, Falgold, Hwange and Riozim, maintained previous prices.

Among the major losers were financial group Barclays which lost 0,40 cents to settle at four cents, brewer Delta Corporation (Delta) down 0, 10 cents to trade at 140 cents and Fidelity Life which retreated 0,01 cents to 13 cents.

Clothing retailer, Edgars, was the only counter to trade in positive territory, gaining 0,39 cents to settle at 12,50 cents.

While the Zimbabwe Stock Exchange (ZSE)’s industrials index registered its biggest gain since dollarisation in 2009 as it closed the year 32,62 percent higher, independent economist Christopher Mugaga said “there are little prospects for new listings on the local bourse due to dismal performance of the local industry.”

“I don’t foresee the international business community coming to raise capital on the ZSE as a result of government’s continued stance on indigenisation.   Consequently, there won’t be any IPOs this year on the ZSE,” he said, adding that “listings may only happen when foreign-owned banks operating in the country are forced to indigenise through listing.”

The ZSE’s market capitalisation, which opened 2013 at $3,930 billion, was also up 32,32 percent to close the year at $5,2 billion. More than $450 million was invested on the bourse in 2013.

Meanwhile, the stock market’s chairperson Eve Gadzikwa has said only 10 companies out of the 74 listed are still in “good shape”.

This comes as several firms have voluntarily delisted in recent months as the biting liquidity crunch has made public listing expensive while the strict conditions are difficult to maintain.

“The rest are tottering,” Gadzikwa said, adding that “it is an industrial Armageddon.”

Among the best performing listed firms is Zimbabwe’s largest mobile network operator Econet Wireless (Econet), Delta and insurance giant Old Mutual.

Since 2012, counters that were either suspended or voluntarily sought suspension include embattled snacks manufacturer Cairns, Celsys, Chemco, Gulliver and Interfin.

Early last year, Tractive Power sought voluntary suspension while Lifestyle Holdings delisted.

Interfresh Limited also delisted with effect from December 31.

The horticulture concern, intending to relist in the medium-term after “aggressive restructuring”, said after delisting, it planned to raise $6 million capital through convertible debt from private equity and structured finance markets, using valuation methods other than the stock market.

A random scrutiny of the ZSE’s volume of shares indicates that only a few blue-chip stocks account for the majority of traded stocks.

This is also reflected in the stock market’s total market capitalisation where only three bellwether stocks namely Delta, Econet and Innscor account for more than half of the value.

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