Equities remain in the positive
Equities on the Zimbabwe Stock Exchange (ZSE) have maintained an upward trajectory since the beginning of the year although experts say they are still largely undervalued.
However, there are also opportunities for all players to realise more value from the market with the right economic fundamentals.
With anticipated economic growth in the country, driven by improved agriculture performance, mining, tourism and the construction industry, growth is also expected to cascade to the equities market and see self-price correction.
Policy interventions are also expected to help restore confidence in the economy, therefore increasing investments and business activity. For instance, the Central Bank recently had to concede to business demands for a downward review of interest rates in order to induce investment and demand in the economy.
This saw the apex bank cutting the bank policy rate from the 200 percent set in June 2022 to 150 percent in the latest Monetary Policy Statement.
The Central Bank also noted the positive developments arising from previously enacted disinflationary monetary policies and fiscal consolidation measures that resulted in change in trajectory of the country’s inflation figures with month-on-month inflation slowing from a peak of 30,7 percent in June 2022 down to 2,4 percent at the close of 2022, then registering 1,1 percent in January 2023. With the increased use of US$ in the country, authorities have blended inflation as the new measure for price changes.
Despite these, the market, experts say, has remained undervalued with big cap counters like Delta, Econet and Ecocash valued at less than US$1.
“The price of shares is not the actual, we are not getting the best to ensure the prices reflect the underlying assets.
“If we get our fundamentals right, we will have more disposable incomes which will go towards stocks; demand will grow pushing valuations to where they should be exactly,” said Courage Nemaungwe, an investor-preneur at a recent panel discussion hosted by the ZSE.
He, however, cautioned prospecting investors to be cautious before committing their funds on the equities market due to its volatility.
He said: “The market may be undervalued but this does not mean you should randomly buy. You still need to be careful, and watch out for the perfect time to buy, which is also important.”
While analysts are optimistic about the outlook for the ZSE, with some predicting continued growth in the mining sector and the potential for gains in the financial sector as the economy improves, there are also downfalls to watch out for.
They caution that the ongoing economic challenges, foreign currency shortages and increased spending to fund the election, could impact the economic performance in the coming months.
On a global scale, economic outlook continues to be weighed down by elevated inflationary pressures, high interest rates and the negative spillover effects from Russia-Ukraine geopolitical tension.
Furthermore, new waves of the COVID-19 pandemic continue to disrupt economic activity in countries such as China.
The IMF projects global economic activity to downtrend to 3,2 percent in 2022, from 6 percent in 2021 and moderate further to 2,7 percent in 2023, marking the weakest growth profile since 2001, outside the 2009 global financial crisis and the acute phase of the COVID-19 pandemic.-ebusinessweekly
