{{Zimbabwe’s stock market has fallen so far from last year’s peak that some investors are stepping back in to scoop up consumer-oriented African growth plays.}}
A rebound in the southern African country’s economy between 2010 and 2012, after a decade-long slump, spurred Zimbabwe’s benchmark industrial index to a record high 233.18 points last August.
Disappointing economic growth since then in the country, rich in gold, uranium, platinum, diamonds and coal, has deterred investors, until recently.
After hitting a trough in April, the benchmark has rallied 7% in the past six weeks to just above 177 points and foreign investors, who account for about 60 percent of activity on the Zimbabwe Stock Exchange, bought a net $37 million in shares in January-April, latest exchange data shows.
“The big attraction is that valuations have been falling, reviving opportunities for investors who have not traditionally invested in Zimbabwe to buy stocks at really good prices,” said Grant Flanagan, managing director at Amigo Partners, which has a Zimbabwe-dedicated equity fund.
“Despite the overriding strain the economy is taking at the moment, the very good businesses will continue to grow stronger and they make a compelling investing case.”
The World Bank predicts Zimbabwe’s economy will expand by 3% this year, half the government’s forecast of 6.4% and compared with 10.5% growth two years ago.
As businesses grapple with electricity and capital shortages, and the mining sector remains susceptible to changes in government policy, equity investors continue to be highly selective on Zimbabwe.
wirestory
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