BH24 Reporter

HARARE – Diversified insur-ance firm Fidelity Life Assur-ance Ltd has sent managing director Mr Simon Chapereka and finance director Mr Ger-man Mushoma on leave to pave way for an audit of the insurance firm.

There have been allegations of corporate governance mal-practices at the firm, which has forced the Insurance and Pensions Commission (IPEC)’s hand in appointing KPMG Chartered Accountants (Zimbabwe) to conduct the audit.

Meanwhile, the company’s board has appointed Mrs Nyaradzo Matindike as acting

MD in the interim.

In a statement to stake-holders today, the company

said IPEC has decided to take the matter into its own hands after initial results of an internal investigation appeared in the media.

“Preliminary results of the internal audit review were unfortunately leaked to the press. While these internal processes were ongoing, IPEC requested an ons-ite examination. To con-clude their report, IPEC has appointed KPMG Chartered Accountants (Zimbabwe) to conduct a forensic audit in terms of Section 67(2) of the Insurance Act Chapter 24:07. This audit is intended to clarify issues relating to business operations, and allegations of corporate gov-ernance malpractices at the

company.

“As part of good corporate governance and in order to facilitate the swift execution of this mandate, the manag-ing director, Mr S. B. Chap-ereka and the finance direc-tor, Mr. G. Mushoma, will be on leave during the tenure of the audit.

“In the interim the Board has appointed Mrs Nyaradzo Mat-indike as acting managing director,” said the company.

The group reported a 36 percent increase in revenue in the full-year to December 31, 2015 to $17,2 mil-lion from $16,5 million in FY2014.●

News Update as @ 1530 hours, Friday 08 April 2016

Feedback: bh24admin@zimpapers.co.zwEmail: bh24feedback@zimpapers.co.zw

Chapereka, Mushoma sent on forced leave

Mr Simon Chapereka

BH24

TAA:DI251386-Y22

2

New money not circulating: RBZ

3 NEws

By Tawanda Musarurwa

HARARE -The Reserve Bank of Zimbabwe (RBZ) and several banks have so far imported United States dollars to the tune of $263 million to enhance liquidity in the market, but there are concerns that the new money is not effec-tively circulating in the economy.

For the first quarter of 2016, the RBZ imported $145 million, while several banks have imported a total of $118 million during the first four months of the year. RBZ governor Dr John Mangudya told the Parliamentary Portfo-lio Committee on Finance and Economic Development some indi-viduals or firms may be holding onto the money for speculative purposes.

“Another reason why there is demand for cash in this economy is for speculative purposes. Spec-ulation here is mainly because of a lack of confidence, and confi-dence is a function of policies...it means if people think that their money is not safe in the banks,

they take it away.

“We can handle the transactional and contingency requirements of cash, but the demand for speculative purposes is too high. We know the amount we have imported over the past three months and we are aware that under normal circumstances it is sufficient for this economy,” he said. Cash shortages have hit the economy in recent weeks, with banks placing limitations on cash that can be accessed at any one time. “Banks are trying to ration the available resources to ensure that at least they can spread it among their customers, and this is very critical,” said Dr Mangudya.

“As a Reserve Bank we have injected a figure of $145 million in the first three months of the year....but it’s not circulating as much as we want because we don’t see the new money being deposited, we only see the old money being deposited.”

“And between January and April this year, banks have imported

$118 million.”

In addition to the importation of cash, the RBZ governor said they were putting in place measures to improve the liquidity situation in the country, including work-ing with the Afreximbank to set up a ‘nostro stabilisation fund’ to improve the country’s nostro situation. He also said the central bank was engaging the business community to put in place a prior-ity list of critical imports, in order to reduce cash outflows through unnecessary imports. Related to this, Dr Mangudya added that reviving the country’s manufac-turing sector and promoting a buy local policy would help in improv-ing reducing cash outflows.

Improving Zimbabwe’s productive sector will help boost sources of foreign exchange for the country, because currently the key sources of forex are exports of gold, tobacco, platinum and diamonds, which constitute about 80 percent of exports, while another source is Diaspora remittances. ●

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BH244

BH245

HARARE –The Government has intervened to end the strike by National Railways of Zimbabwe (NRZ) workers through engag-ing the company's creditors, pushing them to pay up, a cabi-net Minister said on Thursday.

The workers downed tools last week to push their employer to pay them 14 months’ salary arrears.

NRZ is reeling from a debt of over US$30 million, while parastatals such as the Grain Marketing Board (GMB) and Ziscosteel owe it $7 million and $9 million respectively.

Responding to questions in Senate, Transport and Infra-structure Development Minister Jorum Gumbo said some of NRZ creditors had started paying off debts and resultantly work-ers were being paid.

“As a ministry, we then looked into NRZ creditors and fol-lowed them up. Most of them are Government departments,

so they are now paying using Treasury Bills.

“We have paid most of the workers so far. By Friday, we would have paid the remaining workers the little money they agreed with management,” he said.

Minister Gumbo appealed to workers return to their work stations so they could start moving grain which the govern-ment imported to alleviate food shortages.

“We are however insisting pay-ment first before agreeing to move any goods,” he said.

A decline in business has paralyzed operations of the rail utility over the years.

The NRZ is moving an aver-age of three million tons of cargo annually compared to 12 million tons in 1992 and 19 million tons in 1997. At least 93 percent of its revenue used to come from freight services.

The parastatal has been strug-gling to attract new investors since the turn of the millen-nium. According to a study done by a Canadian consultancy firm in 2012, the parastatal requires $1,9 billion for recapi-talisation.- New Ziana ●

6 NEws

Govt seized with NRZ workers strike- Minister

HARARE -Retailers in Zimba-bwe should use conventional strategies to market products in the face of stiff competi-tion rather than resorting to engaging touts, an expert said on Thursday.

Confederation of Zimbabwe Retailers president Denford Mutashu said retailers should use orthodox methods to sur-vive the stiff competition that has arisen on the market.

Many clothing retailers in the capital are now employing touts to lure customers into their shops, with the practice extend-ing to butcheries and super-markets as they battle to out manoeuvre street vendors.

Mr Mutashu urged retailers to desist from engaging touts to attract customers and instead find holistic market approaches for survival.

“This is an unconventional method of marketing and it causes discomfort to customers

as the touts will be using loud hailers attached to radio speak-ers which make a lot of noise,” he said.

He said the influx of cheap second hand clothes was leading shop owners to engage touts to advertise local products.

“We continue to see the coming in of the second hand clothes creating serious competition and bearing pressure on retail-

ers of local products,” he said.

Mr Mutashu noted that the import bill on clothing for the first quota was continuing to soar at $7 billion while exports stood at $3,5 billion.

He urged the government to assist the cotton industry to develop and be able to add value to the crop so as to reduce imports of fabrics - New Ziana●

7 NEws

Retailers urged to employ conventional marketing strategies

HARARE -Gains over the last three trades pushed the equit ies market to a 0.12 upturn from the previous week.

The mainstream industr ia l index c losed the week higher at 97.92 after adding 0.17 as seed producer SeedCo added $0,0050 to trade at $0,6500, whi le GetBucks moved up $0,0030 to trade at $0,0400 and giant insurer Old Mutual was up $0,0025 to trade at $2,2125.

Also trading in the green was Meik les which gained $0,0010 to sett le at

$0,0722.On the downside, Zimre Holdings was the only lame duck as i t s l id $0,0002 to c lose at $0,0178.The mining index gained 0.47 to c lose at 20.16 after RioZim rose $0,0060 to trade at $0,1100.

Bindura, Falgold and Hwange maintained previous pr ice levels at $0,0102, $0,0050 and $0,0300 respect ively. On a week-on-week basis, the mining index strength-ened by 0.63.

- BH24 Reporter ●

ZsE8

Industrials ends week on a high

MovERs CHANGE TodAy PRICE UsC sHAKERs CHANGE TodAy PRICE UsC

GETBUCKS 8.10 4.00 ZIMRE -1.11 1.78

RIOZIM 5.76 11.00

Meikles 1.40 7.22

SEEDCO 0.77 65.00

OLD MUTUAL 0.11 221.25

INdEx PREvIoUs TodAy MovE CHANGE

INDUSTRIAL 97.75 97.92 +0.17 points +0.17%

MINING 19.69 20.16 +0.47 POINTS +2.39%

9 ZsE TABlEs

ZsE

INdICEs

stock Exchange

Previous

today

10 dIARy oF EvENTs

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

PowER GENERATIoN sTATs

Gen Station

08 April 2016

Energy

(Megawatts)

Hwange 437 MW

Kariba 453 MW

Harare 30 MW

Munyati 24 MW

Bulawayo 24 MW

Imports 0 - 400 MW

Total 1268 Mw

Upcoming AGM

• Falgold, KPMG Building, Corner 14th Avenue/Josiah Tongogara Street, Bulawayo,13 April, 1000hrs

THE BH24 dIARy

lUANdA - Angola's central bank has cut the amount of hard currency travellers can take abroad under new rules to cope with a decline in for-eign exchange reserves.

Under the rules made public

late on Thursday, the bank cut the sum that can be taken abroad to $10 000 from $15 000.

Hit by a collapse in the price of crude oil, Africa's second largest oil exporter has been

depleting its reserves at a faster rate to fund imports and pay down government debt.

Oil output represents 40 percent of gross domestic product and more than 95

percent of foreign exchange revenue. Brent crude traded below $39 a barrel this week, down more than 30 percent compared with a year ago. - Reuters- Reuters●

REGIoNAl NEws 11

Angola beefs up currency controls to cope with Fx shortage

Improved emerging markets sentiment boosts sA randJOHANNESBURG - South Africa's rand gained 1 percent against the dollar on Friday, as improved global risk appetite offset investors' worries about the domestic uncertain political and economic climate.

By 0748 GMT the rand had gained 1 percent to 15,1355 per dollar in a rally that kicked-off in offshore trade, where the unit strengthened as high as 15,1420.

"Its been very choppy trad-ing. The rand is moving in the ranges and we've seen a bit of improvement in sentiment in emerging markets. But there's not a lot of liquidity which is why we are seeing these large moves," chief dealer at Bidvest Bank said Ion de Vleeschauwer.

The rand has struggled to hold on to gains below the 15,2000 technical resistance point, but looked set to end the week below the mark as traders

held off bets with a dearth of domestic and offshore data in the session.

"There has been a little bit of

tick back with some traders squaring up before the week-end. It looks like there is some support for the rand in higher 15,20's," de Vleeschauwer said.

The rand failed to gain any traction from positive business confidence and manufacturing data in the previous session, with worries over political ten-sion weighing on sentiment, but gradually gained momentum in overnight trade.

Bonds were flat in early trade, with the benchmark gov-ernment issue due in 2026 unmoved at 9,275 percent.

Stocks were higher in early trade, with the JSE's Top-40 index rising 0,48 percent to 45,239 points. - Reuters●

European equities rebounded from their lowest levels since February, spurred by gains in commodity producers and lenders.

With a 0,7 percent advance at 8:17 a.m. in London, the Stoxx Europe 600 Index is trimming a fourth weekly loss, its longest streak since October 2014. All of its industry groups rose on Friday, with Anglo Ameri-can Plc and Rio Tinto Group leading gains among miners. Italian lenders rallied, with the industry now heading for its biggest gain in almost a month.

The rally that lifted equities from a Feb. 11 low has been losing steam amid renewed concerns over the strength of the global economy. The industry groups that led the advance then -- automakers, miners and banks -- were the ones falling the most this week. The Stoxx 600 lost 4,8 percent from its high on March 14 through Thursday’s close, taking its valuation to 14,5 times estimated earn-ings, near the lowest in more than a year relative to US

equities.

As the gains in the Euro-pean index began stalling, a gauge of options prices for the region started to rise. The VStoxx Index is heading for a third week of increases, the longest streak since January.

UniCredit SpA jumped 5,1 percent after its chief exec-utive officer said financial institutions in Italy are

“intensively” working on a solution that would see pri-vate investors participate in a fund aimed at supporting the recapitalisation of trou-bled lenders. Banca Popolare dell’Emilia Romagna SC and Banca Monte dei Paschi di Siena SpA climbed more than 3 percent.

Air France-KLM Group added 1,9 percent after reporting an increase in passengers for March. Axel Springer SE

jumped 6,4 percent after JPMorgan Chase & Co. raised its rating on the stock to the equivalent of a buy.

Tullow Oil Plc was among the less than 100 shares in the Stoxx 600 that fell. It slid 3 percent after saying flows from a production vessel at its flagship field offshore Ghana will be further delayed - Bloomberg●

INTERNATIoNAl NEws 12

Mining stocks lead rebound in Europe equities from February low

By Jason Hamlin

The gold price advanced sharply during the first three months of 2016 (+16 per-cent), marking its best quar-ter in 30 years. However, it corrected from a high around $1 287 to $1 200 over the past few weeks. There was a nice bounce yesterday, but gold has once gain dropped today, back below $1 220. With this latest pullback in the gold price, many investors are wondering if the 2016 rally was a false breakout or if the new gold bull market is just getting started.

Admittedly, short-term price movements in the gold market are very difficult to predict. But we can get some idea of how deep the current correction might go by look-ing at the technical chart.

This shows the uptrend that has been in place since December and the support this trend line offers at the

$1 200 level. This level gets additional support from being a key point of resistance and support on several occasions over the past few years.

The RSI momentum indica-tor is not yet oversold and

suggests there could be more downside ahead for gold in the short term. I believe another drop to test support at $1 200 is likely and if this fails, the next stop is at the confluence of the 100 and 200-day moving averages

around $1 145.

So is there more downside ahead for gold?

I think so and I have resisted the urge to buy the dip or add on yesterday’s rebound.

13 analysis13 ANAlysIs

Gold is testing key technical support – is there more downside ahead?

14 analysis14 ANAlysIs

My medium-term and long-term sentiment remain very bullish, as I believe the odds that gold has bottomed have increased substantially over the past few months. If this is correct, the gold bull mar-ket is just getting going and the upside potential remains huge.

For those starting to doubt the sustainability of the gold rally, please keep in mind that these types of pullbacks are healthy for the longer-term uptrend in the gold price. A period of consolida-tion is normal after such a quick and powerful rally and helps to rest the bull and prepare for the next leg up.

Gold would need to drop below $1 200 and then fail to find support around $1 145 for us to turn bearish again. One positive sign for gold bulls is that min-ing stocks have not led gold to the downside during the current pullback. In fact, since the top on March 10th,

gold (via GLD) is down 2,2 percent, while mining stocks (via GDX) are actually up 2,6 percent.

Insiders remain buyers and have increased their bullish bets over the past month, according to Canadianinsider.com. Nearly twice as many insiders were buying versus selling this week (65 buying vs 36 selling), although it is down from 79 buying/36 selling yesterday.

Mining stocks have been offering leverage of 3X the advance in the gold price year-to-date. You can see the bounce in the HUI/Gold index below, but mining stocks remain near the most undervalued levels of the entire bull market. They are even more undervalued today than they were at the depths of the 2008/09 financial crisis.

What does all of this mean for gold investors?

A little patience is warranted

during this pullback given the technical signals, but the gold bull market that started in December of 2015 remains firmly intact. Those con-cerned that they have missed the train, should not worry. Although many gold stocks have doubled in the first few months of the year, mining stocks stil l remain near their most undervalued levels (relative to the metals) ever. Even the mining stocks that have doubled in 2016, would stil l need to climb another 5 to 10 times to reach their 2011 highs.

Gold most likely bottomed around $1 045, central bank demand and investment demand remain very robust, while global output is flat and the FED has walked back rate hike expectations signif-icantly. Precious metals are one of the only asset classes that are undervalued at the current time. We believe that if stocks turn lower once again and investors flee the equity market, the enormity

of funds rushing into the gold market will overwhelm the available supply. This is going to cause a rapid upwards revaluation of the gold price.

Furthermore, to whatever extent that the gold price has been manipulated and suppressed, the reality of price discovery moving to China will l ikely reduce the ability of Western banks and government to hold down the gold price.

The bottom line is that I see this pullback as a buying opportunity, but believe buyers are likely to see better prices by waiting a bit longer. Over the next few years, I believe great amounts of wealth will be made by those picking up undervalued mining stocks near the bottom of this mul-ti-year correction in precious metals. Will you be one of them? - GoldstockBull ●