News / Local
'If Zimdollar is abandoned markets and financial institutions will recover'
21 Jul 2023 at 02:56hrs | Views
As the Zimbabwean dollar continues to battle for its survival under severe pressure from the United States dollar despite its recent recovery rally,
John Legat, Imara Asset Management (Zimbabwe) chief executive, says if the local currency is abandoned markets and financial institutions will recover, although clients still don't trust banks.
Said leading fund manager Legat in Imara's latest economic reviews:
"If the Zimbabwe dollar should be abolished anytime soon, then the stock market and specifically the Zimbabwe Stock Exchange, should witness a sharp recovery in USD terms from what is a very low base today. Listed companies are largely thriving; based on our interviews with senior management and as their numbers show. The same can be said for counters listed on the VFEX (Victoria Falls Stock Exchange) where at last analysts can understand the financials being presented now that they are in USD. Most of them are growing fast, are cheap and offer good dividend yields.
"A rerating in real terms of equities and property in Zimbabwe as we saw from 2009 to 2013 will prove hugely beneficial for the insurance and pensions industry whose size today is tiny in the overall scheme of the economy. The same could be said for the banking sector under a dollarised economy, but depositors won't trust their money in the banks under a USD environment until such time as they know their USD nostro funds are safe from Government interference. You can fool someone once but once the trust has been broken, not for a second time. Once bitten, twice shy!"
John Legat, Imara Asset Management (Zimbabwe) chief executive, says if the local currency is abandoned markets and financial institutions will recover, although clients still don't trust banks.
"If the Zimbabwe dollar should be abolished anytime soon, then the stock market and specifically the Zimbabwe Stock Exchange, should witness a sharp recovery in USD terms from what is a very low base today. Listed companies are largely thriving; based on our interviews with senior management and as their numbers show. The same can be said for counters listed on the VFEX (Victoria Falls Stock Exchange) where at last analysts can understand the financials being presented now that they are in USD. Most of them are growing fast, are cheap and offer good dividend yields.
"A rerating in real terms of equities and property in Zimbabwe as we saw from 2009 to 2013 will prove hugely beneficial for the insurance and pensions industry whose size today is tiny in the overall scheme of the economy. The same could be said for the banking sector under a dollarised economy, but depositors won't trust their money in the banks under a USD environment until such time as they know their USD nostro funds are safe from Government interference. You can fool someone once but once the trust has been broken, not for a second time. Once bitten, twice shy!"
Source - Twitter
