BULAWAYO -- Activity on the Zimbabwe Stock Exchange is expected to remain subdued during the fourth quarter due to low disposable incomes in the economy as well as foreign investor apathy, market analysts have said.The local bourses performance is expected to be severely depressed during the month of December as a result of festive season induced sell-offs.
Exposure to the sector should be in companies whose capacity utilisation is commendably improving, (e.g. Innscor, Delta, National Foods) cash generators (e.g. Econet) companies with high growth potential (e.g. Zimplow, CBZ) and aggressively and expertly managed companies that would be able to expand their market share under the obtaining macro-economic conditions, said Kingdom Stockbrokers in their fourth quarter outlook report.
KSB said lack of investment funds was because the restricting liquidity situation in the economy and depressed foreign investor interest in the local bourse.
The benchmark industrial index increased by a marginal 2.33 percent whilst the mining index lost 20.77 percent during the third quarter, rendering a passive investment strategy undesirable under the obtaining market conditions.
The current high charges on the ZSE (3.5 percent to invest into the ZSE and 4 percent to redeem ones investment) have depressed interest on the market as they are too high for investors to reap meaningful returns from the ZSE, reads part of the report.
The report however noted that despite these high charges ZSE was still rewarding much more than other markets in the region with gains as high as 50 percent still being recorded in a week.
Post published in: Manufacturing