INVESTORS are carefully rebalancing their equities portfolio to include big caps as Zimbabwe’s economic and inflation outlook worsens.
An analysis of stock market data shows that investors are buying into the Zimbabwe Stock Exchange’s top 10 counters by market value.
Investors tend to drop non-performers in uncertain times and invest more money in winning stocks or sure bets.
The ZSE’s Top 10 index has on a year-to-date (YTD) basis outperformed all other indices on the local bourse with a 9,21% jump since January. This is not withstanding already higher valuations of the counters.
Cassava, a company spun off from Econet Wireless Zimbabwe Ltd late last year, had a market value of US$3,8 billion; Delta, the country’s leading beer and beverage maker, had a market value of US$4 billion, and Econet, the country’s largest mobile phone operator US$3,8 billion.
Innscor was valued at US$1,1 billion, Padenga at US$568,6 million, Old Mutual US$653,2 million, BAT US$680,9 million, SeedCo International at US$436,3 million, SeedCo US$485,1 million and NatFoods at US$486,4 million.
These companies constitute the bulk of the weightings in the Top 10.
The ZSE’s Top 10 index is a ranking that measures the market’s most valuable companies by market value.
The mainstream all-share index rose YTD by 8,02% while the Industrials index surged 8,26%.
Just last week, volumes traded totalled 42,15 million shares and averaged 8,43 million shares per day.
From weekly turnover of US$24,24 million, activity was recorded highest in Old Mutual, Delta and Dairibord, contributing 31,12%, 27,58% and 9,75%, respectively. Delta and Old Mutual constitute part of the top 10.
In the week to February 2, Old Mutual, Econet and Simbisa, accounted for the bulk of the trades on the ZSE and contributed 30,04%, 12,91% and 12,75%, respectively.
Others such as IH Securities are leaning towards “relatively defensive” stocks such as Econet and Cassava, a company they view as an attractive standalone asset positioned to maintain its strong growth potential.
IH also included forex earners such as Seed Co International and Padenga as companies that could provide a natural hedge in this market.
“Add to that Simbisa, with its regional diversification and Innscor, which has good standing,” IH said.
Target market capitalisation for 2019 is US$18,07 billion, a 7% downside and $7,23 billion in US dollar terms, according to the IH exchange rate forecast.
Delta Corporation valuations