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ZSE rallies as investors calmed by govt assurances
07/10/2013 00:00:00
by Bloomberg
 
Sticking to IMF plan ... Patrick Chinamasa
 
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THE benchmark industrial index rose for a 15th day, its longest winning streak in a year, as investors speculated President Robert Mugabe’s new government will put in place policies supportive of economic growth.

The 73-counter Industrial Index rose 0.7 percent to 209.83, extending gains since September 17 to 12 percent.

Econet Wireless led the gains after an 18 percent increase since the rally started while beverages firm, Delta Corporation, which has the largest weighting on the index, has climbed 12 percent.

The market slumped to an eight-month low on September 5, falling 24 percent after reaching its highest level in more than four years at the start of August.

Mugabe, 89, won elections in July to extend his 33-year rule with threats to seize control of mines and banks from foreign and white investors and give them to black citizens and the government.

But the market jitters have since eased after new Finance Minister Patrick Chinamasa said country would stick with an International Monetary Fund program started in June that may help clears debts and restore the economy.

“The signs have been reasonably positive,” Brian Mugabe, an analyst at Imara SP Reid, said from Johannesburg.

“The government has put measures in place that would take the country forward.

"It also said it will keep on engaging with industry on harmonizing of the indigenisation program for what is best to industry.”

Foreign demand for equities is strong and a primary driver of the rally, Mike Barnes, the Johannesburg-based managing director of Securities Africa, a brokerage, said.

After the post-election sell-off, many stocks became attractive to both local and foreign investors, he said.

The industrial index’s 14-day relative strength index reached 79, the fourth day it traded above the level of 70 that indicates to some technical traders a measure is overbought.

There is “no sign that the rally will stop as demand remains strong across most stocks,” Barnes said.


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