TURNOVER on the Zimbabwe Stock Exchange (ZSE) is expected to reach US$420 million this year surpassing the post-dollarisation high of US$413 million on the back of improved liquidity, according to a leading brokerage firm.
In its report, Zimbabwe Investment Outlook 2011 and Beyond, MMC Capital said improvements in banking deposits, growth of exports and the continued participation by foreigners on the ZSE will all drive turnover beyond 2009 levels when government adopted the use of multiple currencies.
Last year turnover dropped to US$393 million from the 2009 figures after predominantly active foreign investors shied the bourse following the gazetting of empowerment regulations compelling foreign-owned companies valued at US$500 000 to dispose controlling interest to locals.
“Going forward turnover on the ZSE is expected to make a rebound on the back of the improving liquidity measured by growth in banking sector deposits (expected to reach US$3,5 billion in 2011 from US$2,5 billion in 2010), growth in exports (expected to reach US$3,2 billion in 2011 from US$2,5 billion in 2010) and continued participation by foreign investors,” MMC said.
The increased turnover on ZSE is good news in the ears of the country’s stockbrokers who derive their income from commissions on the buying and selling of shares.
MMC said there are three scenarios — bullish, base and bearish — on market capitalisation forecasts with high probability that ZSE will record a modest market capitalisation of US$4,3 billion this year amid anxiety over a possible general election.
“This scenario assumes the market will grow in 2011 but political noise will remain a deterrent to investors especially in the second half of the year when elections may occur,” it said.
There was a 30% probability that the market capitalisation will be bullish this year on better fundamentals and improved liquidity. The market capitalisation will also grow as a result of new listings and rights issues, MMC said.
Canadian firm, Whetstone Minerals, plans to list on the ZSE this year while Kingdom Financial Holdings Ltd returns to the bourse following a demerger from Meikles.
MMC said the market could be bearish ending the year at US$3,9 billion assuming that elections that may occur in the second half of 2011 could be volatile and hence reverse the gains that would have been made in the first half.
Further, liquidity may not significantly improve and implementation of indigenisation regulations may scare foreign investors, it predicted.
Newly listed concern Padenga, according to the report, is expected to be a preferred stock as market punters expect a 25% rise in sales.
“The economic sectors that are expected to contribute towards positive economic growth include mining, agriculture, manufacturing, tourism and telecommunication. The capital market is also expected to remain resilient, sustained by increasing foreign investor participation and improved company fundamentals in 2011,” the report said.
Activities on the stock exchange are closely monitored by foreigner investors as it mirrors the performance of an economy.