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(HERALD) ZSE shares resurge on negative inflation

ZSE shares resurge on negative inflation

NEGATIVE June inflation figures fueled the Zimbabwe Stock Exchange shares resurgence last week, halting losses started June-end. At close Thursday, the mainstream industrial index rose 11,15 percent or 5 721 438 807 008.20 points to 57 112 109 101 473.70 points after reports annual inflation had hit 2,2 million percent for June. Minings leapt 33 percent to fresh record highs at 79 721 657 780 142.20 points led by gains in Halogen and Rio Tinto.

Stocks gained under a bout of mounting inflationary pressures, as Central Statistical Office acting director general, Moffat Nyoni tried to play down the unprecedented growth in inflation.

Nyoni said the figures were not as accurate because the Office was functioning on limited data.

The CSO boss has previously denied allegations of massaging inflation statistics.

"The information was based on fewer observations than we would be confident with due to scarcities," said Nyoni.

Official inflation figures were last published in February at 165 000 percent.

No data has been released from ever since for reasons like the unavailability of products used in the inflation basket on the formal market.

Most products have never been sufficiently available on the formal market for a very long time now. Instead, it has been the parallel market that’s been more active, though at unrealistically wild prices.

Last week, Government also announced the ‘Bacossi To The People’ programme, a populist concept meant to provide basic foodstuffs to the poor at prices next to nothing.

But it was the rising inflation figures that drove the equities comeback.

Investors are also sceptical as to the source of funding for the Bacossi project, whose products the central bank said would be manufactured here.Investors are concerned about the prospect of higher money supply growth, as the RBZ prints more cash to fund Bacossi.

Rising costs are also forcing retailers to increase prices a number of times a day, which has fed into the inflation spiral.

For the review week, average ZSE daily turnover reached $314 015 trillion, at close Thursday, while total market capitalisation closed the day at $801 218 trillion.

The industrial index posted a growth of 57 percent in the four days to Thursday and are up nearly 3 million percent on a year-to-date basis. Minings gained 59 percent in the review week, and have leapt 3,3 million percent since January.

Industrials opened up 23 percent on Monday, adding 16 percent Tuesday before easing 1,3 percent at midweek

Minings also rose, gaining 19 percent on Monday. The index surged 20 percent on Tuesday but declined 0,73 percent Wednesday.

Of the index shares Thursday, 46 counters gained, 8 fell and 23 traded unchanged.

In Friday trading, the market rose broadly with a few losses reported in second liner shares.

Of the ZS shares Friday, tobacco processor, TSL led gainers rising 208 percent followed by Interfresh that gained 150 percent.

Truworths, the giant clothing retailer rose 100 percent, Cottco up 82 percent and TA 80 percent.

Pioneer led decliners falling 33 percent followed by Murray and Roberts down 23 percent and ABCH, which lost 6 percent. Cafca, the electric cable maker dropped 2 percent.

The outlook for the stock market remains largely bullish helped by a weaker rate of exchange and negative inflation forecasts.

Labels: INFLATION, STOCKMARKETS, ZIMBABWE

posted by MrK @ 10:59 PM