Business / Economy
Allan Gray positive on Zimbabwean equities
15 Jan 2015 at 07:58hrs | Views
A SLUMP in Zimbabwean equities to near two-year lows is emboldening one of the largest money managers in South Africa to keep looking beyond the nation's economic woes for returns.
Allan Gray, which oversees the equivalent of $39 billion (R449bn), holds shares in Delta, the SABMiller associate that brews Chibuku sorghum beer, and Econet Wireless Zimbabwe, the nation's biggest cellphone company.
While the 73-member Zimbabwe Industrial index fell 12 percent in the past six months, the most of 14 African bourses tracked by Bloomberg after Nigeria, its four-day rally to Tuesday is the longest stretch since September.
"If anything we're more positive on the stocks because they've been pretty weak," Andrew Lapping, a money manager at Allan Gray, said on Monday.
Slowing growth
"We've never been positive on the outlook for the economy because they're in a very tough place. What we're positive on is the quality of some Zimbabwean businesses, who've managed to weather very difficult times well."
Allan Gray's bets on Zimbabwe contrasts with Investec Asset Management, which is not seeing buying opportunities even with valuations among the lowest in Africa.
Economic growth in the southern African nation slowed to 3.1 percent last year according to International Monetary Fund estimates, compared with an average 10 percent between 2009 and 2012. A lack of cash is causing factory closures and forcing many working-age Zimbabweans to take two or more jobs.
Zimbabwean equities account for about 23 percent of Allan Gray's $235 million Africa ex-South Africa Equity Fund, the most after Nigeria. The fund lost 7.7 percent last year, compared with a 1.6 percent decline in the MSCI Frontier Markets index, according to data compiled by Bloomberg. The Zimbabwe Stock Exchange Industrial index fell 20 percent last year to trade at seven times estimated earnings, the lowest among nine primary African indices tracked by Bloomberg.
Allan Gray, which oversees the equivalent of $39 billion (R449bn), holds shares in Delta, the SABMiller associate that brews Chibuku sorghum beer, and Econet Wireless Zimbabwe, the nation's biggest cellphone company.
While the 73-member Zimbabwe Industrial index fell 12 percent in the past six months, the most of 14 African bourses tracked by Bloomberg after Nigeria, its four-day rally to Tuesday is the longest stretch since September.
"If anything we're more positive on the stocks because they've been pretty weak," Andrew Lapping, a money manager at Allan Gray, said on Monday.
"We've never been positive on the outlook for the economy because they're in a very tough place. What we're positive on is the quality of some Zimbabwean businesses, who've managed to weather very difficult times well."
Allan Gray's bets on Zimbabwe contrasts with Investec Asset Management, which is not seeing buying opportunities even with valuations among the lowest in Africa.
Economic growth in the southern African nation slowed to 3.1 percent last year according to International Monetary Fund estimates, compared with an average 10 percent between 2009 and 2012. A lack of cash is causing factory closures and forcing many working-age Zimbabweans to take two or more jobs.
Zimbabwean equities account for about 23 percent of Allan Gray's $235 million Africa ex-South Africa Equity Fund, the most after Nigeria. The fund lost 7.7 percent last year, compared with a 1.6 percent decline in the MSCI Frontier Markets index, according to data compiled by Bloomberg. The Zimbabwe Stock Exchange Industrial index fell 20 percent last year to trade at seven times estimated earnings, the lowest among nine primary African indices tracked by Bloomberg.
Source - Bloomberg
