Zimbabwe Stock Exchange analysis

Zimbabwe Stock Exchange analysis
Published: 24 January 2012 (3424 Views)
The market last week was characterised by worthwhile activity with a record breaking deal of 120.4m Meikles shares executed at US 17.5c pushing Monday's daily turnover to a post-dollarisation record of US$ 21.4m.  

There was another special bargain of 600,000 Delta shares done at US 70.0c later on in the week whilst counters such as AICO, Dairibord, Econet, Hippo and Innscor were also actively traded. Market players have however remained cautious of the mining sector as reflected in the limited trading volumes.

Unclear policies especially on the indigenisation and empowerment front are likely to continue giving sway on the extent of the funds availed for investment locally. Relative to FDI, FPI has been the largest recipient of offshore investments, as it is easier to withdraw funds from the latter.

This trend could persist in the short term; however we expect favourable negotiation of the indigenisation bill to result in an increase in business confidence and consequently longer term investment. Further, a successful resolution to the Euro-zone crisis should result in an increase in liquidity in Europe and a return in demand for emerging market stocks.

The local bourse amongst other emerging and frontier equities markets could thus benefit from the funds flow.

Imara Stockbrokers believe that the ZSE still carries good long term growth potential given the economy's strong growth prospects, albeit off a low base. Nonetheless, the market will remain volatile and we urge investors to maintain a careful selection policy. Our buy recommendations include AICO, Dairibord, Delta, Econet, Innscor, M&R, Padenga and SeedCo. 

- Imara Stockbrokers

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