By Tawanda Musarurwa

HARARE -The Reserve Bank of Zimbabwe last week announced financial sec-tor compliance credits in line with the new Frameworks, Procedures and Guidelines for implementing the Indigenisa-tion and Economic Empower-ment Act that were promul-gated last month.

Said RBZ governor Dr John Mangudya during the pres-entatio of the 2016 Monetary Policy Statement last week:

"Following the gazetting of the Notice on Frameworks, Procedures and Guidelines for implementing the Indi-genisation and Economic Empowerment Policy, it is

imperative that the Bank pro-vides an in-depth il lustration

of the operationalisation of the guidelines as they relate to the empowerment cred-

its or quotas that contribute towards the 51 percent indi-genisation threshold as is

News Update as @ 1530 hours, Monday 08 February 2016Feedback: bh24admin@zimpapers.co.zwEmail: bh24feedback@zimpapers.co.zw

'Financial sector indigenisation measures to spur economic growth'

Dr John Mangudya

required by law under Section 3(5) of the Indigenisation and Economic Empowerment (IEE) Act and Section 5(4) of the IEE Regulations."

In terms of the pronounced financial sector compli-ance credits, one of the key "socially and economically desirable objectives" will see affected financial institutions lending to the agriculture and/or energy sectors, at least 20 percent of the finan-cial institution’s total loan portfolio.

This will earn the financial institution an empowerment credit/quota of 8 percentage points.

The other the socially and economically desirable objec-tives include Lending to small, medium and micro enterprises (SMMEs), lending to low cost housing, preferential local procurement and lending to women programmes, among several others.

"Levels of some of the sub-

heads are stil l being final-ised," said the governor.

Observers contend that the measures announced by the central bank have the positive effect of driving broader eco-nomic growth.

"The measures encourages banks to participate in sec-tors of the economy that spur economic growth taking into account the indigenisation framework," said MBCA in a note.

Dr Mangudya said the alter-native to the above is for an institution to comply through "pathway 2" of rebate earn-ings deductible from the

compliance and empower-ment levy as presented in the Gazette, General Notice 1 of 2016.

Although the empowerment levy has been met with mixed feeling, Government has maintained that it is a key tool ensuring full compliance to the indigenisation pro-gram.

The proposed tax, if approved, will see companies that have foreign shareholding pay the levy from their gross reve-nues, but this will be mod-erated to a maximum of 100 percent on the basis of speci-fied rebate earnings.●

2 NEws

BH243

By Funny Hudzerema

HARARE - Finance and Eco-nomic Development Minis-ter Patrick Chinamasa has announced the new Zimbabwe Stock Exchange board and called on it to finalise a num-ber of issues which the old board failed to achieve.

He said the new board should develop new products which protects local companies from delisting from the ZSE.

“The incoming board should consider the finalisation of the demutualisation exercise which includes registration of new entity and transfer of assets and liabilities from the existing entity to the new entity.

“The group should come up with new product develop-ment such as the Zimbabwe Emerging Enterprising Market for small to Medium enter-prises intending to list in the country’s secondary bourse

and revival of bond market aimed at bringing more long term capital to the local mar-ket to ease tight liquidity sit-uation,” he said.

The new ZSE board will be chaired by Mrs Caroline San-dura she comes from the stock brokers after Mrs Eve Gadzikwa’s term expired while Mr Alban Chirume will remain as the chief executive.

“We appreciate the develop-ments which were done by the old board to develop a comprehensive five year stra-tegic plan and which subject

to implementation and we are hoping that that the new board will be able to imple-ment that strategic plan.

“The main aim of the strate-gic plan is to transform the stock exchange to make it a world class stock exchange,” he said.

He added that the new board should reduce the trading costs at the ZSE. At least 32 percent of the board mem-bers are from the Government while the rest are stock bro-kers.

Some of the board mem-bers that will be representing stock brokers include Mr Bart-holomew Mswaka, Stock Bro-kers Association chairman Mr Benson Gasura, Mr Kholisani Moyo, and Mr Markus de Klerk. Mr Daniel Muchemwa from the Ministry who will be new accountant general.

In her remarks during the same event incoming ZSE chairman Mrs Caroline San-dura said the new board will implement projects which the old group failed to achieve during the tenure.

“As the new group we assure minister that we will imple-ment the projects that the old group laid us a foundation what we have left with its only implementation

“There are business plans which are there and it’s there for us taking up where the old board have left and move for-ward with it,” she said.●

4 NEws

Chinamasa calls for innovation at ZsE

Minister Patrick Chinamasa

BH245

By Tawanda Musarurwa

HARARE - The Zimbabwe Stock Exchange continues to hemorrhage, with the bourse's total market capi-talisation dropping -8,87 per-cent year-to-date to $2,93 bill ion.

At the close of trading on Fri-day, the markets' total capi-talisation had lost 0,57 per-cent in just the single week as investor sentiment contin-ues to be poor - even among the blue-chip counters.

With few new listings expected

in the outlook, analysts typi-cally expect the heavyweight counters to dictate pace of trading activity, as they can

offer defensive qualities that can limit the downward risk of equity portfolios. But activity last week did not reflect this.

Trading in the blue-chips throughout last week was weak with telecoms and bev-erages giants Econet and Delta, respectively recording losses of 4,01 percent and 1,36 percent.

There was no price movement in the other heavyweight, cigarette manufacturer Brit-ish American Tobacco. But last week's largest gainers included GetBucks, NMB and Old Mutual with gains of 270 percent, 6,67 percent and 4,05 percent, respectively. Turnover for last week totaled $1,73 million.●

6 NEws

ZsE market capitalisation slides -8,87 YTD

BH247

HARARE –The Civil Serv-ants and Business Union of Zimbabwe (CSBUZ) on Fri-day announced plans to rally government workers to con-tribute to a fund which will be used to invest in various sec-tors of the economy for their benefit.

The recently established union has three arms namely the Credit Co-operative Soci-ety, Association in Finance (Assofin) and a company, Sosolo General Dealers.

Addressing at a rally held in the dormitory town of Chitungwiza to unveil the plans, CSBUZ founder and president Mr Wonder Baudi said the union was targeting to establish branches in all the country’s 10 provinces.

“This is only the first rally here in Chitungwiza but we aim to establish 2 000 branches across Zimbabwe. In Hwange we established eight branches in two weeks

and we would like at least five branches in Chitungwiza,” he said.

Mr Baudi said contributions from members would be used to invest in businesses in dif-ferent sectors of the economy while members would also have access to loans through the union credit bureau.

Under the union’s ambi-tious program, Baudi said it was eventually targeting to establish a commercial bank.

“Enough is enough of il l-treat-ment by the existing banks owned by foreigners as they charge abnormal interest rates and require too much

for one to open an account,” he said.

Union vice president Sam-son Ziso urged civil servants to work together to improve their livelihoods.

“Let us put our heads together to fight poverty and listen to what each one of us wants to do and build our wealth which we will distribute among our-selves,” he said.

“You might not have the knowledge to run and grow a business but we have experts who will do that for you,” he said, adding the government was supportive of the union initiative. - New Ziana●

8 NEws

Civil servants planning to establish investment fund

BH249

HARARE - - The main-stream industrial index extended Friday's gains, gaining 0.66 (or 0,65 per-cent) to start the new week on 102.33 points.

But only two counters traded in the positive.

Telecoms giant Econet went up by $0,0290 to settle at $0,2495 while Old Mutual

added $0,0196 to close at $1,7883.

On the downside, cement producer Lafarge eased $0,0105 to trade at $0,2700 and Hippo slipped $0,0050 to close at $0,3525.

Other losses were in Nam-pak which dropped by $0,0030 to $0,0125, while Starafrica shed $0,0019 to

settle at $0,0061 as retailer OK Zim closed at $0,0382 after a $0,0018 slump.

The mining index was flat at 19.53 as Bindura, Falgold, Hawange aand RioZim) maintained previous price levels at $0,0100, $0,0050, $0,0300 and $0,1040 respectively.

- BH24 Reporter ●

ZsE10

Equities market extend gains

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BH2411

MovERs CHANGE ToDAY PRiCE UsC sHAKERs CHANGE ToDAY PRiCE UsC

Econet 13.15 24.95 STARAFRICA -23.75 0.61

OLD MUTUAL 1.10 178.83 NAMPAK -19.35 1.25

OK ZIM -4.50 3.82

LAFARGE -3.74 27.00

PADENGA -1.71 6.88

HIPPO -1.39 35.25

DELTA -0.32 52.00

iNDEx PREvioUs ToDAY MovE CHANGE

INDUSTRIAL 101.67 102.33 +0.66 points +0.65%

MINING 19.53 19.53 +0.00 POINTS +0.00%

12 ZsE TABlEs

ZsE

iNDiCEs

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13 DiARY oF EvENTs

The black arrow indicate level of load shedding across the country.

PowER GENERATioN sTATs

Gen Station

05 February 2016

Energy

(Megawatts)

Hwange 356 MW

Kariba 285 MW

Harare 19 MW

Munyati 29 MW

Bulawayo 24 MW

Imports 0 - 300 MW

Total 1289 Mw

—10 February 2016 - Nampak Zimbabwe Annual General Meeting: venue 68 Birmingham Road, southerton, Harare: Time 12:00

—18 February 2016 - 70th Annual General Meeting of the members of CAFCA ; Place: Boardroom at the company’s registered office at 54 Lytton Road, Workington, Harare; Time: 12:00 hours

—23 February 2015 - 38th Annual General Meeting of the members of Powerspeed Electrical limited; Place: Powerspeed Boardroom, Gate 1, Powerspeed Complex, Corner Cripps Road and Kelvin Road North, Graniteside, Harare; Time: 1100 hours

25 February 2016 - Extraordinary General Meeting (“EGM”) of the shareholders of Radar Hold-ings limited; Place: Tanganyika House, 6th Floor Boardroom, Harare; Time: 0900 hours...

25 February 2016 - The 49th Annual General Meeting of Mashonaland Holdings limited; Place: The Boardroom, 19th Floor, ZB life Towers, 77 Jason Moyo Avenue, Harare; Time: 1200 hours...

THE BH24 DiARY

JoHANNEsBURG -South Afri-ca's rand strengthened on Mon-day along with other emerg-ing-market currencies after softer-than-expected employ-ment data from the United States decreased bets of a rate hike by the Federal Reserve.

Stocks were set to open flat at 0700 GMT, with the JSE securities exchange's Top-40 futures index up 0,2 percent.

At 0645 GMT the rand had firmed 0,29 percent to 15,9850 per dol-lar, managing a third straight ses-sion below the crucial 16,00 mark as it consolidated recent gains.

The rand has gained more than 5 percent against the dollar in last two weeks since slumping to an

all-time low of 17,9950 on Jan. 11.

Bonds were weaker in early trade, with the benchmark paper due in 2026 adding 4.5 basis points to 9,215 percent.

Nonfarm payrolls in the United States increased by just 151 000 jobs last month, data showed on Friday, well short of expectations for a rise of 190 000, prompting some investors to push back bets rate hikes by the Federal Reserve to later in 2016.

The rand would, however, battle for clear direction in the week, traders said, with most Asian financial markets closed for the Lunar New Year holidays and a dearth of data releases locally.

President Jacob Zuma's state of the nation address on Thursday would be closely watched for clues on the government's plan to rescue the ailing economy.

"The bigger question is whether we get any hints of what the budget will look like and so whether a rating downgrade can be avoided," said Rand Merchant Bank currency strategist John Cairns- Reuters●

REGioNAl NEws 14

Rand holds on to gains, stocks seen flat

JoHANNEsBURG - South Africa's Anglo American Plat-inum Ltd (Amplats) reported an 86 percent drop in full-year profit on Monday, hit by write-downs and restructur-ing costs amid plunging com-modity prices.

Amplats said diluted headline earnings per share, the main gauge of profit that strips off certain one-off items, totalled 41 cents in the year to the end of December compared with 300 cents a year earlier.

Amplats, a division of Anglo American Plc is undergoing a cost-cutting programme to deal with plunging prices and low demand for precious metal and the effects of a crippling five-month strike in 2014. - Reuters●

sA's Anglo Plati-num says FY profit

drops 86 pct

European shares declined for a sixth day as investors fret-ted over global growth pros-pects.

The Stoxx Europe 600 Index slid 0.6 percent to 324.06 at 9:05 a.m. in London, heading for its longest losing streak since June. It is trading at about 14.2 times estimated earnings, and about 18 per-cent below its April 2015 peak. A gauge tracking equity swings has jumped 42 percent this year as the Stoxx 600 has lost about 11 percent.

“Investors can’t make up their minds about the global econ-omy, but the risk of recession and deflation is rising,” said Francois Savary, the chief investment officer of Prime Partners SA, a Geneva-based investment manager. “It’s not enough that valuations have receded quite significantly and earnings haven’t been too bad -- sentiment is very low and there isn’t much visi-bility right now. That’s fright-ening.”

European stocks fell 4.8 per-cent last week in volatile trading amid investor concern

over oil prices, earnings and the strength of the US and Chinese economies.

Among stocks moving on cor-porate news today, Imagina-tion Technologies Group Plc slumped 4,7 percent after forecasting a “material reduc-tion” in sales and profitability for the full year. The company

also said its chief executive officer has stepped down.

Randgold Resources Ltd. rose 2,9 percent after saying it more than doubled its spare cash last year, allowing the metals producer to increase its dividend by 10 percent. Casino Guichard-Perrachon SA advanced 4,2 percent as

it agreed to sell its stake in a Thai supermarket chain for 3,1 bill ion euros ($3,5 bil-lion).

Rio Tinto Group and Glencore Plc led a gauge of commod-ity producers to the best per-formance of the 19 industry groups on the Stoxx 600. - Bloomberg●

iNTERNATioNAl NEws 15

European stocks decline for a sixth day on global growth concern

During the last four years, we have seen one fundamental ana-lyst after another claim that the fundamentals are stronger than ever as it relates to the metals. We find this thinking to be ques-tionable, at best.

Why have fundamentals failed so miserably to control the market, and are they relevant any longer?

In order to appropriately find direction in this market, we may have to actually understand that we are asking the wrong question. In fact, one has to ask if funda-mentals were ever really con-trolling to begin with.

Yes, I know everyone believes that "eventually," fundamentals will control this market. But if one is truly honest in seeking an answer to this question, one has to ask themselves: If fundamen-tals do not control the market all the time, are they really ever in "control" of the market at any time? Or is it simply that when the market is moving in the same direction as dictated by the fun-damentals, then the fundamen-tals are simply a coincident factor,

rather than a controlling one? This is what we refer to as the "broken clock" syndrome.

Think about it. When a child is sitting in the back seat of the car with a toy steering wheel, and the car turns in the direction the child is turning his toy, does it mean the child is controlling the car?

Again, based upon the market action over the last four years, one has to come to the conclusion that fundamentals are really not in control of this market. Rather, the "adult" driving the car in the metals market is sentiment, and it controls the market all the time, with its hands quite strongly on the steering wheel.

Ultimately, it means that a pru-dent investor must acquire the appropriate tools through which they are able to track market sentiment in the metals if they expect to be able to outperform the market. As an example, our methodology of tracking market sentiment through the use of Elli-ott Wave analysis directed us to exit the market once we exceeded the $1 900 level in gold, back in

2011, and has us moving back into the market in 2016. While we still expect lower lows in the metals, the potential exists that many of the miners have already bottomed.

To retrace the thinking of the past several years, for many analysts, year after year they pointed to the increased debt and rising demand worldwide for the metals (along with a litany of other rea-sons), leading them to constantly conclude that the gold is going to rally to $2000-plus overnight. After reading all these articles for four years, one would think that the market should have been well over $2,000 by now.

More investors have appropri-ately been questioning the effi-cacy of the fundamentals upon which these predictions have been based, as they have seen their comparative wealth destroyed during the decline of the last four years. This destruction is most clearly evident in the silver mar-ket, which has lost almost 75 percent of its value since its 2011 highs.

In 2015 and the start of 2016, many have begun to recognize the futility of using "fundamen-tals" for predictive purposes in the metals market: "Using fundamen-tal analysis is futile, as a great many precious-metals bulls will attest." The author then makes the head-scratching move of bas-ing his predictions on the funda-mentals he says have not worked.

However, over the last year, some have begun to open their eyes to the true futility of using funda-mentals to predict the direction of gold, and have done more than provide lip service to the reality of the market.

In order to be a well-informed and successful investor in the metals market, one must have a means by which they can track what always controls the metals-mar-ket sentiment, rather than only track what "sometimes" drives the metals market. If you understand the facetious nature of the last sentence, then you are well on your way to a successful invest-ment career in the metals market. - Market watch●

16 analysis16 ANAlYsis

why fundamentals are no longer relevant for gold