ZSE does well for equity investors in 2009
By Ronny Zikhali

ALTHOUGH the Zimbabwe Stock Exchange (ZSE) overally performed negatively during the past year, it rose to earn equity funds an 18 percent growth in the last ten days of 2009, a sign that the new year brings in better prospects on the bourse, an equity fund has reported.
Old Mutual Unit Trusts (OMUT) reported that ZSE recorded a marginal negative growth of 1 percent in the last quarter of 2009.
The local bourse re-opened for trading in March last year after closing down in the in November 2008.
When it re-opened it traded in United States dollars, and was reportedly doing well and attracting a lot of investment from foreigners.
In a monthly newsletter to clients, OMUT General Manager, Mr Gilbert Gumpo, said investors who put their money on the Zimbabwe Stock Exchange (ZSE) early in the year enjoyed an exceptional growth in their portfolio values.
“The ZSE’s industrial index recorded a return of 371 percent for 2009, which represented a real return given that inflation was negative in 2009,” he said.
At the end of November 2009, year to date inflation stood at -8,1 percent.
On the lat day of trading last year, the local bourse’s industrial; index closed at 151,99 points and the mining index was at 185,50 points.
Share prices that moved up include Steelnet that closed the day at 0,35 US cents, the National Merchant Bank (NMB) at 0,80 US cents, Natfoods at 135,00 US cents, Art ZDR at 4,50 US cents and tourism and hospitality giants, Africa Sun, who closed the year at 12,00 US cents.
Shares that went down included Interfresh that closed the year at 0,50 US cents, Zimplow at 2,50 US cents, Dawn Properties at 1,30 US cents, CBZ at 16,00 US cents and Innscor at 59,80 US cents.
Mr Gumpo said, in the outlook, the ZSE will commence 2010 with lower transaction costs and that augurs well for equity investors.
Transaction costs on the local bourse were reduced from 7,5 percent to 3,21 percent. “The lower costs will encourage trading and improve liquidity conditions and at the same time improve net returns,” he said.
Mr Gumpo pointed out that in 2009, most listed companies struggled due to a high cost base on the back of low capacity utilization.
“There has been an improvement in capacity utilization and our view is this improvement will continue into 2010 and will result in better financial results. We therefore expect ZSE performance to be positive in 2010 as most listed companies will be operating more optimally than in 2009,” he said.
The OMUT general Manager said while OMUT expects a positive return from the ZSE, it was not going to be the artificial performance of the previous year where the market trebled everyday as inflation affected the economy.
“It is however worth noting that due to the use of more stable currencies we are unlikely to see the multi-digit growth we had become accustomed to,” he said.
He said the money market still had challenges in that the rates remained relatively higher than international comparatives due to liquidity constraints.
“Interest rate quotes remained at the short end of the market due to elevated risk concerns over locking money in the long term,” he said.
Money market rates ranged from 0,20 percent to 25 percent in the 30 to 90 day horizon.
“Going forward, we anticipate that an increase in confidence in the local money market should see money market activity becoming more active for longer term investments. An improvement in liquidity could also result in interest rates softening,” he said.