FML Gets Another Disputed 'Red Card'
FIRST Mutual Ltd (FML) or is it Africa First ReNaissance Corporation, the name that shareholders recently agreed to bestow on their company, was suspended from trading, during Wednesday's morning call over.
We are made to understand that the row between the Zimbabwe Stock Exchange (ZSE) and the company was sparked by the resolution, which the ZSE objected to, but which shareholders thought it was well within their rights.
The resolution sought to change the name of the company. Members of FML were of the opinion that they had the right to call their company whatever name they wished to, so long as the Registrar of Companies had not objected. Consequently one shareholder proposed the name change under "Any Other Business", it was seconded and after extensive debate, it was voted for by the majority. Market watchers, analysts and the legal fraternity are, as what came out of the members' meeting, frantically trying to draw or at least find the now "faint" line between shareholders' and ZSE's rights. This could be an interesting one!
Zimre Property Investments (ZPI) initial public offering has entered its second week, at a time when the market has gone belly up. The events of yesterday, unfortunate as there are, will definitely throw spanners in the works of the share issue. By close of business yesterday the industrial index had lost a record 17,89% to close at 42 472 143.89 points. Most counters had lost an average 20% in a single day.
What is going to happen now to the pricing of the issue at $1 500 which had been yanked up from $720 per share to put it in line with the rest of the market. Will the advisors of the listing now revise their price, with only a week to go before the offer closes? At a guess, the attraction of the issue will be reduced, particularly if already listed property companies Dawn and Mash trade below the ZPI issue price. These developments will, no doubt, further delay the other much- awaited listing of Pearl Properties which was finally approved by FML shareholders on Friday last week.
For some yet unknown reason, the stock market fell off the bed yesterday. Early in the week, it had appeared that investors had shrugged off the price controls or the directive to slash prices by 50% and it was business as usual on the bourse. On Monday and Tuesday, the industrial index gained an average 10%, at the same time that a noticeable level of militancy was being added to the implementation of the price control directive. By Wednesday, a fair amount of hesitancy was beginning to creep into the market. On that day, the market regressed by 3,06%, before the "black Thursday". We also gather that some rumour could have started the bloodbath which caught many investors unawares.
One hopes that this market crush will not undo the gains that have been accumulated since the beginning of the year or even in June alone. Last month the market gained a record 262%, bringing the year to date gain to 7 469%. For the quarter, investors got an uplift of 971%, which is not a bad return by any measure. Now if one did not sell at the peak, all this could go down the drain, hence the panic by many punters. In their bid to salvage what ever profits they could, they are adding to the selling pressures. Institutional investors on the other hand seem to have stayed by the byline watching the proceedings with a lot of curiosity.
As usual after a very quarter, we profile those counters in which mounds of cash were made. CFX claims the podium, with a phenomenal 7 173% capital appreciation. The buying frenzy, firmly supported by strong volumes, continued unabated throughout the quarter, lifting the market capitalisation of the bank from $36,2 billion to $3,6 trillion. In US$ terms, CFX is now worth US$24,8 million, a significant push from US$1,7 million at the end of March 2007.
The only surprise was that, at the annual general meeting (AGM) held recently, there appeared to have been no issues. The chairman retained his post, and no new members were appointed to the board. Many had anticipated that whoever had been buying the shares and pushing the prices to such loft heights would show their hand at the meeting by either being elected to the board or taking over the management of the bank, given that there was a leadership vacuum following the departures of both Group CEO and MD for the bank. However, the mysterious buyer opted to remain anonymous.
Zimplow was the other contender to the throne, with a 6 053% push, possibly on the back of the bonus issue and the last interim monetary policy statement. Then, the RBZ Governor had indicated that the RBZ had placed an order for 100 000 units of ox-drawn implements under its agriculture mechanistion programme.
Kingdom, with a performance reminiscent of 2001, came third with a return of 5 733% for the quarter. Investors appear to have been taken to the return of Nigel Chanakira as CEO and the rekindling of the "Wall Street" dream. Even then, many expect the banking group to consolidate the performance of second half of last year. The chairman of Meikles, at the recent analyst briefing, re-affirmed the group's support for Kingdom, and investors took that as a cue to pile in.
Going forward, the third quarter, which in the past used to be the most profitable for investors appear to have started on a bad note. One hopes, that all the factors currently affecting sentiment on the bourse will wash themselves out before it is too late.
Last Updated: Fri, 06 Jul 2007 20:34:00
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