Amstel Securities said that Zimbabwe Stock Exchange (ZSE) is the most under performing market in Africa due to the low returns that it delivers to investors, compared to other African markets.
In an investment report, Amstel Securities said ZSE suffered a 7,5% drop and this compared unfavorably with other African markets such as Kenya and Uganda that have delivered returns of over 40%.
Amstel said the country needs to exploit its mineral resources in order to see growth.
“Liquidity remains an issue in Harare with weekly volumes averaging between US$2 million and US$3 million. The only way to get meaningful Zimbabwe exposure is participating in initial public offers and secondary offerings,” said Amstel
“The major driver of growth will be the exploitation of the country’s mineral wealth because Zimbabwe’s recovery potential is large,” Amstel said, adding that the economy had the potential to treble in size.
“Zimbabwe’s economy can easily triple in size to over US$12 billion by 2015. As a matter of fact, some estimates currently suggest that the Zimbabwean economy is already double the size of recent IMF estimates of just US$4, billion as of 2009.
Following a decade of economic decline and a two year period of hyperinflation, the economy of Zimbabwe hit rock bottom in late 2008 with its Gross Domestic Product (GDP) shrinking by 14%, adding to the already steep decline which started around the year 2000,” said Amstel.
“Dollarisation has provided significant benefits to Zimbabwe. Improvements in monetary, fiscal and economic policies have made Zimbabwe a much more vibrant economy with further recovery potential, in our view.”
Amstel also said that, “Beyond mining, Zimbabwe offers large opportunities in agriculture, cheap hydro power, and tourism which after a decade of decline has finally been revived. We forecast tourism to double in size to US$1billion by the year 2015.” In an interview, ZSE boss Emmanuel Munyukwi said it is true that the market has been affected but there is hope for the future.
“The market has been affected for some time and the major reason is due to the lack of liquidity. Another reason is because of the Indigenisation Bill which brought about a lot of uncertainty since a number of investors were no longer keen to invest in the country,” he said. He also added that, “Price earnings ratios in most companies are quite low but with the recovery in the economy we hope for an improvement. Our stock market has a future,” he added.
Source: Business Today