Industrial index registers half year growth

HARARE, July 30 (The Source) – The industrial index registered a 38 percent growth to 223.58 points during the first half of the year while the mining index increased by 11 percent to 70 points, finance minister Tendai Biti has said.
Presenting the mid-year fiscal policy recently, Biti said while trading on the Zimbabwe Stock Exchange (ZSE) remained subdued during the first quarter of the year, the months May and June registered a phenomenal growth in the industrial index and market capitalization.
“This has resulted in the local bourse being ranked fourth in Africa by weekly turnover, after Nigeria, Johannesburg Stock Exchange and Nairobi Stock Exchanges and third by year to date return, after Ghana and Uganda,” Biti said.
Market capitalization, which was at $3.9 billion at the beginning of the year, breached the $5 billion mark in May and closed at $5.3 billion in June.
Despite the sterling performance, Biti said activity was below that of 2012 and was mainly confined to a few solid counters.
“Foreigners continue to dominate, with average market participation of 61 percent on the buy side.
“On the other hand, local investors are mainly net sellers due to low disposable incomes and savings,” he said.
Despite the positive growth, the exchange continued to face challenges which included absence of new listings and companies struggling to remain afloat.
Some of the listed companies were struggling due to lack of working capital and inability to meet obligations of listed companies.
Biti said about 20 percent of the listed companies on ZSE remained inactive with some having applied for voluntary de-listings while others had been forced to de-list for failure to meet minimum requirements.
“The exercise should result in more active counters of quality on the exchange,” Biti said.
Some of the delisted companies include Cairns, Apex, Barbican Holdings, TZI Limited and Red Star Holdings.
Biti said there was need for the country to attract a significant amount of foreign portfolio investments adding that efforts were being made to ensure good corporate governance, enabling infrastructure and strengthened regulatory and supervisory framework.
In line with the vision of modernizing capital markets infrastructure, Biti said notable progress had been registered in the establishment of the Central Securities Depository (CSD).
Earlier this year, government gazetted regulations to pave way for the operationalisation of the CSD.
The regulations set out a framework for the registration, supervision and regulation of the CSD as well as licensing requirements for depository participants.
Meanwhile, Biti called for the speedy automation of the ZSE.
“The benefits accruing from an automated system cannot be over emphasized, particularly in this era of ever evolving technology,” he said.
Other plans were the demutualization of the exchange expected to be completed by end of the first quarter of 2014 and the establishment of an SME bourse with consultations currently underway.