Foreign Investors reviving their interest in Zim as an investment destination

Investors across Zimbabwe's economic spectrum are reviving their interest in the country as an investment destination and the country's stock exchange has been projected to register significant activity in share trade transactions, Business Live reported on Sunday.

The Zimbabwe Stock Exchange (ZSE), according to Imara Capital, is the best-performing bourse on the continent and top performers such as mobile company Econet, dairy products concern Dairiboard Holdings and Delta Beverages, the 37% SABMiller-controlled beverages maker, are currently averaging 40% in returns.

Over the past couple of weeks, smaller ZSE-traded counters, such as cabling manufacturer Cafca and Pearl Properties, have also been top performing, and this has been attributed to the aggressive mood that Zimbabwe-focused investors have adopted.

London's AIM-listed Zimbabwe investment vehicle Masawara Investments, which intends to move into the telecommunications sector and is active in the properties sector, wants to list on the ZSE this year. The company, which has also revealed that it will actively look for investments in the mining sector, has identified August this year as the provisional date for its listing on the local bourse.

"We are looking at investing on the stock exchange, probably in August this year," said Shingai Mutasa, CE of Masawara. "We want our shareholders to get value for their money and we see Zimbabwe as a very lucrative investment destination. We are confident on the market and our strong management team."

There is great potential for investors flocking to the ZSE, and the fact that most of the blue-chip and much stronger counters, such as Econet and Delta, are top-performing means that that investors seeking exposure to the stock market will have options on whether to invest in the blue-chip counters or in the smaller counters such as Cafca, according to investment analysts at Old Mutual Zimbabwe.

"There is so much potential for the stock market, and there have been some strong indications that investors - not only from inside Zimbabwe but from elsewhere - are interested," said Taonaziso Chawe, an investment analyst.

Moreover, the majority of the companies in the retail, property and consumer markets are set to rebound as investors eye high growth potential destinations. "The retail sector is coming up and the property sector - although subdued at the moment - is also coming up," said an Imara Securities Angola official with knowledge of the Zimbabwean market.

Emmanuel Munyukwi, ZSE CEO, said foreign investors held the key to a brighter future for the local bourse. "The foreign investors have not totally deserted the market. They remain very keen on Zimbabwe, but the uncertainty has affected their confidence."

The local exchange market, Munyukwi said, recorded a $36 million market turnover in March this year, while last month the market's turnover finished on the downward, at $35 million. Other analysts said this was caused by the negative sentiment and low investor confidence following the gazetting of final thresholds for the indegenisation law.

The local market has also been hit by an illiquid market. But market sources and traders say the "top-performing companies have predicted a significant increase" in average earnings per share, with others putting forward a 20% growth prediction by the end of the year.

Some foreign-owned companies are planning to list on the ZSE as part of compliance plans with the country's contentious indegenisation law. One such company is New Dawn Mining, which operates the massive Blanket gold mine in southern Zimbabwe.

Masawara boss Mutasa envisages a successful listing and trade in his firm's shares on the ZSE. He also said he would soon jump into this market at a "competitive" price.

Sean Gammon, who heads Imara Zimbabwe, told delegates to the Zimbabwe Investment Conference in Harare last week that Zimbabwe's market capitalisation of $4 billion was understated. He said his organisation's assessment puts the country's market capitalisation at about $10 billion, mainly because some of the country's major mining operations are not listed on the local bourse.

"We are sort of stacking up with a market capitalisation of about $10 billion. Most of the leading mining properties in Zimbabwe are not listed on the ZSE and this puts our market value of $10 billion into perspective," he said.