The Zimbabwe Stock Exchange shares halted a losing streak and closed Friday in positive territory. Today’s performance comes as the Finance Minister proposed an increase in the withholding tax to 1.5% from the current 1% on shares that are held for a minimum period of 6 months.
Ncube believes many are holding stocks for speculation. Shares held for a period of less than 6 months will be subject to a withholding tax of 2%.
“We remain in favour of companies that have fundamentally grown organically or via acquisition, specifically consumer facing names, which are also experiencing actual volume growth. In the event of price correction on the market, these counters will remain defensive,” said advisory firm IH Securities in its latest macroeconomic update.
If put into practice, analysts contend that it will be a bit costlier for retail traders who have entered the market in increasing numbers lately.
The ZSE is currently a currency and inflationary hedge, according to IH Securities.
“The influx of funds on the stock market has created a dislocation between fundamentals and market dynamics,” it said.
The ZSE is currently at a market capitalization of US$12bn at interbank, a year to date movement of 210%.
“The majority of stocks are punching above their earnings capacity.”
Meanwhile, trading activity remained subdued on weak investor sentiment at a time when authorities seemed to have good intentions on solving the exchange rate volatility but there is doubt their actions are not exactly helping.
The ZSE All Share Index was 1.03% higher to 10,712.88 points. The Top 10 Index added 1.70% to 6,671.57 points. Cigarette manufacturer was up 5.8% to ZWL$2900 on traded value of ZWL$580 000. Beverage maker Delta gained 4.7% to settle at ZWL$157.12. IH Securities anticipate Delta’s product mix to shift to mainstream and premium brands as disposable incomes recover. It expects revenue to increase by 167% to ZWL$88.7bn in FY22 from ZWL$33.20bn in FY21 driven by volume recovery and marginal price adjustments.
“We expect further EBITDA margin correction from 28% to 23% in FY22 as input costs surge upwards following the rise in utility costs and removal of fuel subsidies,” it said.
Banking counter CBZ was 0.28% lower to ZWL$900. IH Securities expects CBZ’s deposits and loans to grow at a rate of 83% and 174% respectively largely due to the translation of foreign currency denominated deposits, increased overdrafts and increase in the agro-loan book.
The Mining Index rose 6.52% to 6,966.06 points after Bindura’s 11.5% gain to ZWL$5.19.
ART led losers, declining by 8.7% to close at ZWL$10.04. Starafrica shed 5.3% to end today’s trade at ZWL$1.20. Hospitality group RTG fell to ZWL$5.25, losing 5%. Horticulture exporter slumped to ZWL$3.60, recording 4.9% depreciation. Zimplow closed at ZWL$25, going down by 3.8%.
As a result, the Medium Cap Index retreated 0.57% to 20,833.19 points.
Afdis was 4.8% higher to ZWL$110.
Medtech led gainers, appreciating by 14.6% to close at ZWL$58. The Small Cap Index eased 2.78% to 389,045.08 points-HARARE