No radical shift expected

HARARE - Bullish conditions persisted last week and this saw six counters reporting gains above 100% in a single week. The bull run, which was initially triggered by speculation on banks, spilled over into other sectors leaving the entire market in an overweight position even on a forward PE basis.

However, this has not deterred investors from the stock market as bids remained firm. The upward momentum is likely to carry into this week. The week will see the RBZ issue the 2005 4th monetary policy review statement a day before the IMF team pays a routine visit to the country to assess the progress on the recommendations that were made in their last visit.

We do not expect any radical shift in monetary policy and there is a 60% chance that the policy review will accelerate the market. It is likely to continue to be the case of “the tail wagging the dog” i.e. reaction to inflation while there is an odd chance that the $26,000 exchange rate could be scrapped.

The top gain of the week was furniture retail concern PELHAMS, which put on an impressive 206% to close the week at $550. The company has undergone severe financial stress over the last 18 months due to the debt overhang emanating from a rise in interest rates that were mismatched by the fixed interest on hire purchases.

Pelhams is likely to follow the route of its peer TEDCO and raise new capital to finance its credit model. The share price is likely to stabilise at the current level until fresh news has been injected into the market to support the share price.

The second highest climber of the week was CHEMCO, which put on 150% to $80,000 following the publication of its exceptional October finals. TA HOLDINGS firmed 143% to $17,000 with the only relevant news to the counter having been the possibility of selling their interests in Sable Chemicals to the Government.

Though the pricing according to press reports seemed quite low, the market seemed to have nevertheless been excited by the news. This could be the case as the price controls on the price of fertiliser had been eating into the group’s equity and a sale at the correct price could mean the group pursuing alternative investments. Continuing holding an interest in Sable Chemicals could mean continued losses for the group as the fertilizer price is likely to continue to the controlled as long as the agrarian reform continues to fail to meet expectations.

Other top gains included POWERSPEED, ZIMSUN and ZIMPLOW which closed at $1800, $2300 and $5000 respectively. ZIMPLOW is likely to have been propelled by the huge cautionary announcement relating to negotiations with an unlisted company that could result in an acquisition.

Former penny stock Celsys put on 96% to $450. Losses were quite marginal with the only significant decline being TEDCO, which shed 20% to $1200 while TRUWORTHS eased 10% to $5200. In minings HWANGE put on a marginal 9% to $25,000 while gold producers FALGOLD and RIO TINTO each put on 6% to $7650 and $530,000 respectively. HALOGEN was unchanged while BINDURA shed 3% to $44,000.

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