Published: 21 January 2014

The Zimbabwe Stock Exchange's industrial index will this year depend on the policy environment and it could be highly volatile over the year, Business Monitor International (BMI) has said.

This then means that the industrial index has much unpredictability which makes stocks a more risky investment.

As a result, investors want a higher return for the increased risk. Companies with highly volatile stocks need to therefore grow profitably, showing a dramatic increase in earnings and stock price over time, or pay very high dividends.

"The heavily-weighted banking sector is facing a rising tide of non-performing loans," said BMI.

The analysis therefore means that the issue of nonperforming loans needs to be resolved to attract investment in the sector and external credit.

"Our bullish view on the Mauritian Semdex has gained 5.16% since initiation on October 30, and we believe that there are further gains to be had.

The index looks good technically, with a recent bullish break through previous all-time highs, set in May 2011, and we are also positive towards it due to attractive political and macroeconomic fundamentals" said BMI.

In their regional equities report, BMI forecast that Kenya equities market will benefit from a strong economy, powered by consumer-focused stocks in banking and telecoms. BMI is an is an independent provider of proprietary data, analysis, ratings, rankings and forecasts covering 195 countries and 24 industry sectors.
- bh24

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