FORGET the blue chips this year. Investments analysts see new stocks making money for investors.
The risk averse investor is, however, going to be looking at something different from the traditional picks.
A look at the 2010 top 10 performing counters shows how bellwether stocks like Delta, PPC, Econet and Seedco swing wildly.
Interestingly none of the “big-five stocks” made it to the top 10 picks. But investing on such stocks is surely not foolishness.
Zimbabwe’s manufacturing sector, currently operating at 40% capacity owing to liquidity problems, obsolete machinery and competition from the region constituted the bulk of the best performing stocks.
Agriculture, mining or manufacturing which contribute nearly 40% of Zimbabwe’s GDP, according to some investment analysts will continue to anchor the ZSE. Other analysts contend that telecoms and mining stocks will remain buoyant on the back of growing teledensity and an anticipated rise in metal prices on the global market.
Africa Investment Markets executive director Farai Dyirakumunda says investors will continue to be cautious in their stock selection while fund managers may choose to adopt a defensive strategy to minimise downside risk in the uncertain market. Dyirakumunda says “particular interest” would remain in counters with characteristics of dominant market position, cash generating capacity, sustainable gearing levels and market growth prospects.
He said counters such as Econet, Delta, Innscor, Seedco, Old Mutual, PPC and CBZ “would be prominent with institutional investors while retail investors with a higher appetite for risk will also include in their portfolios some of the small to mid cap counters” with growth prospects.
Another investment analyst with a local investment bank sees Seedco, M&R, Colcom, Hwange, Zimplow, NTS, DZHL, CBZ, Ariston, OK, Padenga & Turnall as top-ten favourites.
The same analyst says fund managers will also be looking at counters such as Old Mutual,PPC, Econet, Delta and Innscor to “stabilise the portfolios” but will not rake in that return of investment compared to penny stocks and mid-caps with growth potential.
“I don’t see Delta or Innscor doubling in the current year. M&R is on a recovery path just like PG Industries in line with the construction sector. One thing to note is that business has learnt to discount developments that might obtain on the political font. Blue chips are stable and for risk averse people. But a fund manager might want to make money by taking positions in those counters that are likely to make a profit basing on current fundamentals,” said the analyst.
Stockbrokers are cautious that a planned general elections expected to mark an end to the coalition government between President Robert Mugabe, Prime Minister Morgan Tsvangirai and his deputy Arthur Mutambara could scupper the resurgence of the ZSE.
“Several indicators point to improved macroeconomic factors and a positive economic growth in 2011 including low inflation projected at 5%, a balanced budget, improved loan to deposit ratio projected at 67% and an increased savings ratio projected at 23% amongst others,” said MMC Capital in its investment report.
“The downside to these positive projections remain anchored on the implementation of indigenisation regulations, the possibility of volatile elections or the continuation of discord in the GNU. Taking cognisance of the fact that financial markets are sensitive to economic and political developments, the anticipated positive macroeconomic environment is a plus for investors whilst the uncertain political environment raises the risk for investors. Our view is that elections represent the highest uncertainty for 2011 but whilst they have not yet been officially declared, investors should not lose out by watching politicians dither.”
Top Ten of 2010
TOP TEN COUNTERS BY SHARE PRICE MOVEMENT IN 2010*
Counter Sector 31-Dec-09 31-Dec-10 Change
NTS Transport 1.00 3.00 200%
TURNALL Manufacturing 2.30 6.70 191%
ZIMPLOW Manufacturing 2.50 6.70 168%
PIONEER Transport 0.25 0.60 140%
DZLH FMCG 7.50 17.00 127%
ABCH Banking 20.00 45.00 125%
TRUWORTHS Retail 1.60 3.50 119%
COLCOM Agro-industrial 22.00 48.00 118%
HWANGE Mining 28.00 53.00 89%
ZPI Real Estate 0.40 0.75 88%
BOTTOM TEN COUNTERS BY SHARE PRICE MOVEMENT IN 2010
Counter Sector 31-Dec-09 31-Dec-10 Change
ZECO Engineering 1.00 0.15 -85%
RED STAR* Retail 0.30 0.05 -83%
AFRICAN SUN Hospitality 12.00 2.20 -82%
PGI Manufacturing 9.00 2.60 -71%
ART ZDR Manufacturing 4.50 1.40 -69%
GULLIVER Engineering 0.60 0.21 -65%
TA Conglomerate 58.00 20.50 -65%
FIDELITY Insurance 6.00 2.20 -63%
TNFH Conglomerate 2.00 0.80 -60%
CFI Agro-industrial 29.00 13.80 -52%