'ZSE to stabilise in Q4'

HARARE - The Zimbabwe Stock Exchange (ZSE) is likely to remain depressed, with hope for recovery in the last quarter of the year, EFE Securities (EFE) says.

The equities research and financial advisory group said while the bourse’s benchmark industrial index reached a high of 195,25 points in the third quarter to September on the back of anticipated government “mega deals” in China, challenges remained.

“These, however, could not draw attention from the overbearing structural weakness in the economy that has been evidenced by the sustained liquidity challenges and weakening demand as well as the lack of tangible cash investments into the economy,” said EFE in a report, adding that “we are likely to see softening of the market before a rebound in the dusk of the quarter”.

“The macro perspective gives no stimuli and only technicalities such as market cycles justify the rebound towards year end,” it said.

Last month, the local bourse posted its worst trading — falling by an overall nine percent — since the beginning of the year.

The mining index posted its second biggest monthly fall after shedding 24,12 percent.

On the other hand, an overall 38 counters closed in the red during the month, with 12 of them posting losses above 20 percent.

“Excitement was also buoyed by several long-term deals inked in the quarter, but, however, the glory is bound to be short lived as the realities of an economy on nose dive hold,” said the equities research firm.

It noted that most heavy counters would have to retreat downwards before leading recovery towards year end.

EFE said counters likely to spur growth are Innscor, Seedco, National Foods (NatFoods) and SABMiller’s Delta.

“We foresee Delta finishing the year weaker to its year opening levels, but at least five percent up on the current price. NatFoods has a clear upside owing to its recent financial performance. Seedco and Innscor have sharply dipped and could emerge stronger as the quarter winds,” said the company.

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