Profit taking weighs down ZSE

The bourse has been volatile in the past three weeks, as the market reacted to the political developments.

The local bourse’s performance is expected to be severely depressed during the month of December as a result of festive season-induced sell offs.

Market analysts said investors should be vigilant and monitor their investments.

“Investors should continue to monitor their investments on the market and use strategies that would benefit them in the long run,” analysts said in a report.

They said exposure to the sector should be in companies whose capacity utilization is commendably improving like Innscor, Delta, National Foods, and cash generators like Econet.

Companies with high growth potential like Zimplow and CBZ that are aggressively and expertly managed have been tipped to be cash cows for investors.

“Volatility in cheaper stocks should remain at elevated levels as short-term investors take advantage of the low prices. Even though short-term trading on penny stocks is on momentum, investors should, however, look for companies with upside potential of more than 20 per cent and opportunities for high dividend declarations,” analysts said.

They advised that the consumer counters still remained the best to buy into.

“Most of people’s money is going towards food,” said the report.

They said banking was also commendable because almost all banks have met the 30 September 2009 deadline for them to meet half of the prescribed minimum capital.

“Any lines of credit to be availed to this economy would go via banks,” he said.

Manufacturing, properties and tourism still remained as huge risks. Manufacturing is affected by low capacity utilization and a need to recapitalise, and properties sector suffers from lack of liquidity.

“Properties had also been overvalued in the hyperinflationary period and we except significant write-downs soon. Unlikely to recover soon,” market watchers said.