'ZSE to record negative growth'

HARARE - The Zimbabwe Stock Exchange (ZSE) is expected to record negative growth this year due to political uncertainties and depressed economic activity, market experts have warned.

Equities research firm Lynton-Edwards Stockbrokers (Les) this week projected the local bourse to close approximately 10 percent in the negative position at year end.

“Factors that support our projections include continued political uncertainties and lack of sufficient economic catalysts,” said Les.

The local stock exchange closed 2014 with a market capitalisation of $4,36 billion.

The equities research firm noted that they did not expect the economy to get any major boost in 2015.

“We continue to see a slowdown in economic activity and this will result in further decline in aggregate demand. While government is working around the clock to get the much-needed capital and financial help, we do not believe the impact will be felt in 2015,” read part of its outlook.

Les added that consistent with its expectations at the beginning of the year, they adopted a sceptical view towards the equities market as the country had not done much with regard to economic, institutional and political reform since the last general elections held in 2013.

However, Les highlighted that the upside risks to the stock market achieving these forecast levels include a better than anticipated performance by Delta, OK and Econet in their 2015 financial results.

Also included is increased “market wide” uptake of non-performing loans by Zimbabwe Asset Management Company (Zamco), significant injection of Foreign Direct Investment (FDI) by the European Union (EU) and further clarifications of the country’s indigenisation laws.

“We believe that the factors highlighted above will impact the different sectors variously, with relatively flat implications for some sectors.

“Once Zamco takes up a sizeable number of non-performing loans, we expect to see continued recovery in the banking sector which has gained 4,87 percent year to date as at April 8, 2015,” said Les.

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