ZSE down but picking up


Zimbabwe’s key industrial index which peaked at 754 604 in August, and was down to 601 246 just before central bank governor Gideon Gono unveiled his monetary policy, had plunged to 401 542 at the end of the year as investors scrambled to cover their positions before Gono’s new policies came into effect on January 1. It had, however, recovered somewhat to 479 876 by January 28.

The Discount Company of Zimbabwe says the industrial index dropped by 40 percent in December alone while the mining index was down by 10 percent. Interest rates soared, on the other hand, rising as high as 1000 percent.

“The effect of the rise in rates meant that individuals, corporates and institutions who had taken hedge positions to offset the rising inflation curve, were caught short when the interest rates went above 50 percent per month,” DCZ says.

“The interest exceeded any gain in the asset acquired, whether in property, shares, or forex, and part of the demise in the stock market was caused by sellers who needed liquidity to minimise the interest burden.”

Gono’s monetary policy saw several banks facing a liquidity crisis, but as DCZ says, this was not necessarily a solvency issue. It also exposed one of the biggest financial scandals in the country when directors of ENG could not pay back depositors.

Though the scandal continues to unravel with more people being arrested, the market seems to be recovering as interest rates have once again plummeted.

The industrial index rose by 19 percent in the first four weeks of the year.

Ironically, while financial counters were suffering the brunt with two, Century and First Mutual Life being suspended, the top performer was Finhold a lacklustre counter which has never had an outstanding performance. But it is being favoured over established banks because of its reasonable bank charges. Its share price rose by 155 percent in January.

New technology company, Econet also sprung another surprise. Though there were reports that the government might be investigating the company and might want to suspend its operations, its share price rose by 135 percent.

Life insurance giant Old Mutual also did well with its price rising by 95 percent, while Apex Corporation, one of the top performers last year continued on its good run with a price hike of 92 percent. Horticultural company, Interfresh had a price surge of 82 percent. It continues to perform well though part of its estate is still listed for acquisition.

National Foods, probably the country’s largest milling company, had a bad start with its price falling 47 percent. It is not clear why because the company seems to be doing well as it has been granted contracts to mill drought relief supplies.

Gold producer, Falcon Gold, last year’s star performer, also had a bad start with a price decline of 44 percent followed by Circle Cement whose price was down 40 percent. Agricultural inputs manufacturer Chemco was down by 36 percent while Bulawayo engineering company, Radar, was down by 26 percent.


Top performers for January 2004
Finhold 155%
Econet 135%
Old Mutual 95%
Apex 92%
Interfresh 82%



Worst performers for January 2004
Natfoods -47%
Falgold -44%
Circle -40%
Chemco -36%
Radar -26%


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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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