“Do not look for the needle in the haystack, buy the whole haystack”

Published News

More taxes collected to fund development: GOLD Star Sugar staged a furious comeback during the half- year ended September 30, 2021, rebounding from a COVID-19- induced factory shutdown and a fire incident to lift sales by 46%, according to a report by its parent company, starafricacorporation Limited. The company which is reaping rewards of substantial capital outlays into its refining capacity, lifted output to 39294 tonnes during the review period, from 26 959 tonnes in 2020, demonstrating its ability to navigate through headwinds. But recovery was also helped by consumers who trooped back to supermarkets after government relaxed lockdown restrictions to save a faltering economy. For a firm that has painfully charted a fresh trajectory in the aftermath of a frustrating decade highlighted by high gearing, which ended with a near catastrophe, steep sugar demand could be the catalyst starafrica required to quicken its recovery.

Exporters seek higher retention threshold: Captains of Industry are pushing for a review of the sectors’ expert retention threshold, arguing the current levels have resulted in inflated costs for businesses due to exchange rate disparities. The central bank has maintained the current retention level of 60 percent to the industrial exporter while the balance of 40 percent is sold to the bank at the auction rate and used to fund the bank’s forex obligations. Challenges regarding availability of foreign currency auctions have seen the delays in settlement of successful bids on the auction, resulting in backlogs of more than 10 weeks amounting to approximately US$270 million of November 2021. The apex bank said in November last year it had started the process to clear nearly the outstanding auction allotments after receiving the requisite funds from the Treasury. The Confederation of Zimbabwe Industries (CZI) has asked the bank to amend settlement time for allotted bids to shorten delays and avoid fueling the black market, which is a source of cost push inflation.

Market Commentary

“Do not look for the needle in the haystack, buy the whole haystack”

Since a portfolio rebalance on December 31, 2021, the OMTT ETF has been on a record-breaking upward trend, with a year-to-date gain of 91.44 percent, putting a literal meaning to the saying "Do not seek for the needle in the haystack, rather purchase the whole haystack in what could be considered "irrational investor exuberance". The ETF is trading at a 75 percent premium, with a net asset value of $4.82 and a trading price of $8.42, providing investors with a fantastic arbitrage opportunity. Instead of matching the Top 10 index (which has a year-to-date return of 12.76 percent), the ETF has outperformed it by 78.68 percent (tracking error).

Meanwhile, when the medium cap retreated, the ZSE ASI rebounded from prior day losses, soaring by 97 basis points. The volume of trading today was substantially lower, with 2.3 million shares worth $128 million changing hands. Market mood was close to level, with 17 of the 37 stocks gaining, 18 relaxing, and 2 remaining unchanged, as indicated by market depth. Masimba gained 10.93 percent, Turnall gained 10.37 percent, and Med Tech (Class A) gained 8.23 percent. Unifreight, on the other hand, gained 7.71 percent, while NMB fell 7.71 percent to end at $12.00.

No trades were recorded on the VFEX today.


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