Zimbabweans seek safe haven in equities ahead of the introduction of bond notes

With no appetite for local counters, foreigners have remained net sellers offloading shares worth $7.818 million which is approximately 76 percent of the 9 month average sales of $10.27 million while only $1.77 million worth of shares has been bought by foreigners.

“Local investors are moving cash away from the banks in search of safer investments such as equities ahead of the introduction of bond notes in November,” noted an analyst with a stockbroking firm.

The analyst said there are no fundamentals that support the demand for equities at the moment but bond notes are being viewed with suspicion by the investing and wider public.

Valuations are negative and results published show waning earnings for most counters.

“Asset allocations are now shifting towards equities as investors prefer to hold securities that can store value rather than holding cash or near cash assets which run the currency risk given the uncertainty associated with the surrogate currency,” said the analyst.

“As such, the demand for equities is only based on hedging not on economic fundamentals that drive the share price upwards such as good financial performance or market news that can positively affect the share price of a particular company.”

A good example is the case of the largest ZSE company by market capitalisation, Delta, which on Monday reported an eight percent decline in half-year revenue on weak volumes and depressed consumer demand but its share price has shot up from 60 cents as at 30 September 2016 to 76.62 cents yesterday, the analyst added.- The Source

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