'ZSE market cap to reach US$5bn'

Published: 10 June 2013
MARKET capitalisation on the Zimbabwe Stock Exchange (ZSE) is expected to climb by 30 percent to US$5,1 billion this year due to increased foreign investor participation, researchers at advisory firm, Invictus, have projected.

Invictus said forthcoming elections were unlikely to dent appetite for stocks.

In the past four years, the ZSE had significantly lagged behind other regional equities markets, with negative perceptions caused by infighting in government and a controversial asset grab programme being among the major triggers of investor fatigue.

The ZSE's market capitalisation ended the year 2012 at US$3,8 billion.

In the report entitled "Equities Strategy, 2012 Review and 2013 Outlook", Invictus confirms previously held views that risk averse foreign investors had always been on their wings to swoop on ZSE counters once stability and policy consistency was guaranteed.

It however further predicts robust Gross Domestic Product (GDP) growth of close to 10 percent from 2014 as bulls return to the ZSE, the country's trade deficit narrows , government revenue collection improves and more companies expand.

"We expect the market to reach US$5,1 billion market capitalisation in 2013, implying upside of 30 percent," Invictus said in the report compiled last month.

"We believe that the forthcoming elections will be the catalyst for sustainable growth and development in Zimbabwe. Regardless of the outcome of elections we firmly believe that the new government will adopt a more investor friendly approach in order to raise much needed capital for expansion and job creation. We thus expect the ZSE to perform strongly in 2013 ahead of the forthcoming elections in June/July 2013. We expect "a flight to safety" as investors rotate into blue chip stocks ahead of elections. We encourage investors to take positions ahead of elections and strongly believe that Zimbabwe is poised for a strong recovery in 2014," said Invictus.

The researchers projected that Zimbabwe's real GDP, which is expected to grow by four percent in 2013, will reach closer to two-digit growth in 2014, registering 9, 5 percent in 2014 before slightly declining to 9,4 percent in 2015, both just shy of 10 percent.

Preparation for elections, which many expect in July, kicked off last week when Zimbabweans voted for a new constitution which among many issues, is expected to strengthen democratic institutions, governance and accountability.

The country's main political parties, President Robert Mugabe's Zanu-PF and Prime Minister Morgan Tsvangirai's Movement for Democratic Change (MDC-T) will lock horns in the battle to rule the country.

Previous elections have been bloody and controversial, and triggering apprehension that has forced investors to adopt a wait and see attitude, even though analysts said resource-rich Zimbabwe presented good investment opportunities if the political bickering ended.

Since dollarisation in 2009, the country has registered robust growth, with investors expecting an immediate resolution to an array of hurdles that include power shortages, a collapsing infrastructure, high interest rates and deadlocks over the empowerment programme.

"Zimbabwe has enjoyed strong economic growth. This growth, however, appears to be moderating. We, nevertheless, believe that the forthcoming elections, expected to take place in July 2013, will be the catalyst for more robust growth in 2014," said Invictus.
- fingaz
Tags: ZSE,


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