WARNING: This is Version 1 of my old archive, so Photos will NOT work and many links will NOT work. But you can find articles by searching on the Titles. There is a lot of information in this archive. Use the SEARCH BAR at the top right. Prior to December 2012; I was a pro-Christian type of Conservative. I was unaware of the mass of Jewish lies in history, especially the lies regarding WW2 and Hitler. So in here you will find pro-Jewish and pro-Israel material. I was definitely WRONG about the Boeremag and Janusz Walus. They were for real.
Original Post Date: 2004-01-23 Posted By: Jan
From the News Archives of: WWW.AfricanCrisis.Org
Date & Time Posted: 1/23/2004 7:16:50 AM
Zim: The Stock Exchange Bubble Bursts
THE Zimbabwe Sto-ck Exchange’s (ZSE) 17 financial counters have been at the vortex of the storm that has pummeled the benchmark industrial index to its biggest dip in seven years at the beginning of the year.
In December alone, the industrial index measuring the performance of the bourse’s 75 counters, dropped by 43 percent as firming interest rates put the skids on the equities market, leaving punters stuck with virtually worthless scrip.
The industrial index, which peaked at 754 604.01 points on August 28 2003, stood at 601 246.1 points just before the delivery of the monetary policy on December 18.
It has sunk to just over 300 000 points in the aftermath, largely on the back of massive losses in financial counters as the sector is failing to find a bottom following the drastic turnaround of its fortunes.
The dire state of affairs in the sector was amply accentuated by last week’s suspension of trade in banking houses Trust Holdings Limited (Trust), Century Holdings Limited (Century) and diversified financial group, First Mutual Limited (FML) on the ZSE, as the exchange moved in to protect the interest of investors in the bedeviled firms whose stock had sunk to startling levels.
Trust, which had grown to be the biggest banking group in the country by virtue of balance sheet size (assets worth $800 billion) and was trading at about $150 per share in mid-December, had been dragged down to below $40 following a string of massive losses. Strategic partner FML, which listed at $62 on November 24, had retreated to $18, while Century’s stock had sunk to $3.50 following last year’s highs of about $35.
The three institutions have epitomised the problems besetting the whole banking sector.
Trust had a crippling liquidity problem that was reportedly inducing shocking daily losses in interest payments and a bloated balance sheet with illiquid assets.
There were far-reaching management changes at Trust, which saw chief executive William Nyemba and his lieutenants Chris Goromonzi and Nyevero Hlupo standing down.
The bank was also defrauded of $7.7 billion, allegedly by employees.
FML was exposed to the collapsed ENG Asset Management company to the tune of $27 billion, while Century also had a debilitating liquidity crunch that saw the central bank injecting $30 billion into the banking group.
All the other banking and insurance stocks on the ZSE have gone though significant re-ratings that have seen their prices plummeting, with the exception being the Finhold group, which gained 40 percent in the first week of the year, although at circa $350, it is trading at 50 percent of its December levels.
Until recently, the financial services sector had stood as the last bastion in the recessive economy, until the RBZ’s new monetary policy wrought some radical changes to the market conditions, a situation which has brought heightened apprehension about impending bank failures.
The banking sector crisis, driven by a protracted liquidity crunch, has been compounded by stiffer RBZ rules on liquidity support and the crack down on non-core (read speculative) business by some banks.
This has sent tremours into the sector and the ZSE has not been spared.
The financial stocks have, however, largely suffered as a result of misgivings by the investing public as the exact extent of the contagion emanating from ENG and other asset management firms is yet to be established.
However, some stock market analysts believe that the slide is just about over, with softening money market rates seeming to give credence to this view. Money market investment rates, which peaked at 900 percent at the end of December, have significantly subsided to levels around 300 percent, which should bring the equities back into vogue, particularly those stocks that have consistently delivered inflation-beating earnings.
“The equities market has fallen to levels where we feel that there is now more upside potential than downside and serious investors should begin to buy into quality counters such as those without gearing, that are cash rich and those with external operations,” Patrick Saziwa, an equities analyst with Kingdom Stockbrokers, said.
Indeed, the stock exchange closed last week in the ascendancy, with the industrial index putting on 1,71 percent on Wednesday and 5 percent on Thursday.
Another investment analyst with Kingdom Stockbroker, Mike Tippett, reckons that the softening interest rates would provide a boon for the equities.
“We anticipate that interest rates will stabilise somewhere between 150 percent and 250 percent, which will give an annualised yield approximating official inflation.
“This, together with the value ascribing to good quality equity investments at the prevailing lower levels, as evidenced by low historic PE (price to earnings) ratios and forward PE ratios below one, means that the gloom in the equity market may be relatively short-lived,” Tippett said.
Investors who have had their fingers burnt on the ZSE in the past month will certainly hope the ordeal is short-lived.
Source: AllAfrica.com
URL: http://allafrica.com/stories/200401220525.htm…br>