'ZSE to record zero growth in 2014'

HARARE - The Zimbabwe Stock Exchange (ZSE) is expected to record negative growth due to depressed activity on the local bourse, market experts have warned.

In an investor alert released this week, equities research company Lynton-Edwards Stockbrokers (Les) revised its initial ZSE growth projection from 10 percent to the negative figures.

“Judging by the market’s performance in the first three quarters of the year as well as the poor results being reported by listed stocks we do not believe the ZSE will be able to notch our projected 10 percent gain by the end of the year.

“We thus revise our end of the year forecast for the ZSE to flat to negative,” said Les.

The equities research firm had based its projections on the performance of Delta, Innscor and Econet among others.

“While Econet is likely to close the year positive, Delta will only close flat at best but that is also very unlikely,” said Les adding that Innscor, OK Zimbabwe, Hippo, TSL and Meikles are likely to close the year in the red and in the process drag the market lower.

“Among our top picks, Old Mutual, National Foods and BAT are likely to close positive but their gains will be outweighed by the losses elsewhere,” added Les.

Market experts assert that Zimbabwe is not doing enough to attract investments resulting in the country’s stock exchange becoming one of the only two, out of 18 exchanges in Africa, to record losses on its main indices year to date.

The local bourse is down 3,96 percent year-to-date and is only joined by Nigeria which is 0,47 percent lower in Naira since the beginning of trading this year.

This is despite the country’s market trading in United States dollar which insulates foreign investors from ex-change rate losses as is the case in other markets. According to Les, in US dollar terms there are eight countries including Zimbabwe that are trading in the red.

“South Africa’s JSE and Nigeria’s NIG ALSI are down 2,29 percent and 3,06 percent respectively in US dollar terms. Ghana’s GSE ALSI is the worst performer down 24,4 percent year-to-date,” said Les.

ZSE listed stocks have not been attractive this year with the bulk reporting reduced profits at best and losses at worst.

After recording a 0,60 percent drop in September 2014, the ZSE has started the month of October, which is also the start of the third quarter, weaker, closing in red in three consecutive days.

The drop in the market comes at a time ZSE listed companies are reporting their June 2014 interims and final results which are largely negative and showing signs of economic distress.

The slackening economic growth and depressed financial performance in Zimbabwe have combined to spark fears of delisting’s on the local bourse.

This comes as a record 12 companies have departed from the local bourse over the past five years.

Several listed entities are voluntarily leaving the ZSE, saying they are not realising value while others are saying new investors are increasing their individual shareholding beyond the bourse’s prescribed threshold.

According to ZSE’s listing rules, an entity that acquires more than 35 percent of a listed company is required to buy out minority shareholders at the current trading price and subsequently delist from the bourse or reduce shareholding to prescribed level.

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