CDC to migrate to T+3 settlement

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Chengetedzai Depository Company (CDC) is set to migrate from the current Trade plus five days T+5 settlement cycle to T+3 by April this year following consensus from market participants. In an operating update for December 2016, CDC chief executive officer Campbell Musiiwa said migration from the Delivery Versus Payment (DVP) model 2 to DVP model 3 is also a key target for this year. “CDC recognises the importance of further improving the capital market through the introduction of international best practice, reduction of counter-party risk and increasing convenience for the investing public. As such, the shortening of the settlement cycle from the current T+5 to T+3 together with migration from Delivery Versus Payment (DVP) model 2 to DVP model 3 have been identified as key targets for 2017,” he said. This also comes as Thomas Murray, Global Rating Agencies, has upgraded Chengetedzai’s CSD rating from BBB to A. – The Herald, 25 January 2017

The National Social Security Authority has availed a $20 mln term loan facility to a local commercial bank aimed at enabling the sourcing of fertiliser raw materials and stocks from a foreign supplier. This comes at a time when local fertiliser producers are struggling to stock up mainly due to shortages of foreign currency in the country. In a NSSA fourth quarter statement for 2016, board chairman Robin Vela said fertiliser raw materials and stocks have now been availed to local producers. – The Herald, 25 January 2017

Two Zimasco subsidiaries, Shangani Energy Exploration and Zimasco Holdings have approached the High Court seeking a provisional order to be placed under judicial management, saying the move would avoid disruption of the company’s turnaround strategy. The firms made the application after they were sued by African Banking Corporation on November 21 last year over a $12 million debt. – NewsDay, 25 January 2017

Norwegian energy firm, Eltek Power Systems has partnered with the United Nations Development Programme to provide complete photo voltaic solar solutions for 104 hospitals in Zimbabwe. Eltek will provide full delivery, installation, service and monitoring of the solar systems which use Eltek’s breakthrough Rectiverter technology as a key component. The Rectiverter combines the function of a rectifier and an inverter. Installation of the equipment is expected to be completed during the summer of 2017.– Daily News, 25 January 2017

Market Review

The ZSE’s main industrials index was flat to negative on Tuesday, easing 0.24% to 144.07. The mining index was unchanged at 54.56 with no trades having been recorded. Stocks that dragged the market lower were BAT down 1.64% to 1,500 cents. The counter was one of the top performers last year closing 2016 with a year gain of 37.30%. Investors are likely not to read much into yesterday’s fall as the counter is considered by many as a defensive stock. The company also pays a hefty dividend having paid out 100% of its half year earnings as dividend, making it an attractive option for many investors.

Meikles shed off 7.17% to 11 cents with just below 22,000 shares having changed hands. The counter is now down 15.38% year-to-date. There could be some bit of profit taking there as the stock gained a strong 52.94% last year. There is also sentiment that the consumer spending power is likely to remain under pressure in 2017 which might see retailers struggle a bit.

Econet was the day’s biggest loser down another 11.11% to close at 24 cents. The counter is now down 20% since it released a circular regarding its plans to raise $130 million to pay off its international debts. The capital raise, if approved, will help reduce the company’s cost of debt from about 13.1% to approximately 5%. However, the payment modalities have put pressure on the share price. Shareholders are expected to pay for the extra shares in an offshore account. With the current challenges of sending funds outside, it might be difficult for minority shareholders to follow their rights. So there is a bit of selling pressure before they get diluted if they fail to follow their rights. But if the deal is approved by shareholders, profitability for the Group will be enhanced because of the savings that will be made through reduced debt payments.

Delta closed 2.18% firm at 91.98 cents with 243,849 shares changing hands. Despite falling volumes and revenues, the beverages maker remains one of the well capitalized companies with modern equipment. It also has strong brands and good management. Most investors view it as a defensive stock.  Other risers were CFI up 2.5% to 10.25 cents and Old Mutual up a marginal 0.17% to 351.1 cents.

Turnover for the day was just above $317,000, but below the daily average turnover of $367,000. For the same period in 2016, the average daily turnover was $539,000 so investment into the market has slowed. In 2015 average daily turnover was $879,000.

By |January 25th, 2017|Categories: ECO, Headlines|

About the Author:

Kudzanai Sharara
Kudzanai’s background in financial journalism with ZFN, combined with a continuing education in financial management, provide a solid grounding for his work in the research department.