Taking Stock Kudzanai Sharara
Most of the Zimbabwe Stock Exchange indices closed at their monthly highs in Zimbabwe dollar terms as investors struggle to find a suitable home for their investments.
The overall market capitalisation closed at a 2019 monthly high of ZWL$31,2 billion beating the previous high of ZWL$30,5 billion achieved in September this year.
The industrials Index was also at a 2019 monthly high of 801.38 up from October close of 777.48.
Record monthly highs were also recorded by the Mining Index at 344.42 and the All Share Index at 240.81.
Only the Top 10 Index at 216.29 failed to beat the 2019 monthly high of 218.09 recorded in September.
Turnover for the month at $131,8 million also failed to make it to the top beating only three other months since the beginning of the year.
The 3,07 percent gain for the industrials index was, however, lukewarm in the wake of inflationary pressures currently prevailing in the economy.
At the last count in October 2019, month-on-month inflation reached 38,8 percent.
Investors normally use stocks to hedge against inflationary pressures but there seems to be little appetite for stocks as reflected by the marginal gains and subdued activity during the month.
Treasury Bills that Government is using to fund its projects have also found few takers with the latest 272-Day issue to raise ZWL$300 million only receiving bids of ZWL$30 million or 10 percent which were all rejected by the central bank.
Company performance has also reflected a troubled economy with most industrial stocks that reported their quarterly performances for the period ended September 30, 2019 reporting double digit drop in sales volume.
The Top 10 Index, which recorded a marginal 0,89 percent gain saw some of its member stocks reporting significant drops in sales volume.
The market’s biggest company by market capitalisation Delta, reported a 40 percent decline in volumes for its lager beers.
The company blamed the sales decline on a myriad of factors including potable water shortages, electricity and fuel shortages, and foreign currency shortages among other challenges. Sorghum beer volume in Zimbabwe fell 29 percent for the quarter while volumes for sparkling beverages also fell by 36 percent for the same period.
At National Foods Q1 volumes were very subdued, closing 36 percent below the same period last year. Flour volumes were most heavily impacted, closing 50 percent below last year, on the back of intermittent supply and increased cost of wheat.
Chief executive Michael Lashbrook said: “volume performance in the remaining categories was largely reflective of consumers down-trading in favour of more affordable commodities, with Groceries (mainly rice and salt) closing 47 percent down, Snacks and Treats 37 percent down and Stockfeeds 25 percent down.”
Middle tier stocks, retailers in particular, also suffered from subdued disposable incomes with Truworths the hardest hit having recorded a 68 percent drop in revenue. Competitor, Edgars, saw its sales volume fall by 23 percent.
The two clothing retailers, which offers credit terms to customers, count civil servants among their biggest customers but weakening consumer spend has failed to keep up with ever increasing prices for merchandise, which are literally tracking the exchange rate.
The same trend was witnessed at OK Zimbabwe, Axia, Dairibord and African Sun among others.