Tough time for investors


The stock market which had become a safe haven for investors over the past two years is now lagging behind escalating inflation which soared to 228 percent last month. The key industrial index had risen by only 65 percent by the end of the first quarter while the mining index had risen by a credible 128 percent. But this increase was inflationary because the industrial index had plummeted by 89 percent in US dollar terms while the mining index had gone down by 85 percent. Inflation is expected to soar to over 500 percent by the end of the year.

Some counters, however, beat inflation in local terms. Topping the list was Apex whose price soared by 650 percent in the first quarter. The company is into heavy engineering, radio manufacturing and printing.

Transport company, Clan, closely followed behind with a 471 percent increase. Its price soared following news that it is to be taken over by a relatively unknown transport company, Pioneer Motor Company, which runs luxury coaches as well as haulage trucks. It is also assembling luxury coaches.

Others that beat inflation included General Belting whose price went up by 344 percent. Electrical company Powerspeed had a 312 percent increase. Engineering company, Gullivers which is part of Apex, had a 264 percent increase and tyre retread company, National Tyres, had a 254 percent increase.

Astra which was the top performer last year is now out of the running. Apex, which was the second best, has continued its good run. BiccCafca, Truworths and Mashonaland Holdings, which were among the top five performers, are now out of contention. On the downside were banking group Barbican whose price had declined by 25 percent though it had record profits in its report for the year ending December. Also not doing well was international insurance giant, Old Mutual which is listed on the London, Johannesburg, Harare, Windhoek and Blantyre exchanges. Its price had declined by 14 percent.

Another insurance company, Zimnat had a 9 percent decline, while cement manufacturer Circle, which was forced to close down for some weeks because of a shortage of coal and non-viability because of the controlled price of cement, saw its price plunge by 12 percent. Pharmaceutical company, CAPS had a 6 percent decline.

The worst performers last year were mostly financial institutions but they seem to have recovered because of the good results for the year ending December. Kingdom is not yet out of the woods as its price only increased by 1 percent. NMB did much better. Its price rose by 187 percent while that of Commercial Bank of Zimbabwe went up by 71 percent.

But local investors have little choice. The money market offers a negative return of over 170 percent. Assets such as vehicles, hard currency and property are the only alternative.


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Charles Rukuni
The Insider is a political and business bulletin about Zimbabwe, edited by Charles Rukuni. Founded in 1990, it was a printed 12-page subscription only newsletter until 2003 when Zimbabwe's hyper-inflation made it impossible to continue printing.


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