via Zim stocks not attractive: Investec | The Herald January 13, 2015
LONDON. – Zimbabwe’s stocks, the cheapest among African shares, aren’t a buying opportunity for Investec Asset Management, which says consumers and banks in the southern African country are continuing to struggle.
“They’re some of the cheapest stocks in our universe, but they might remain cheap for a long time,” Joseph Rohm, who helps oversee $2 billion of African equities for Investec, said by phone from Cape Town last Friday.
“There’s a liquidity crisis in the Zimbabwean banking sector and the consumer’s under pressure.”
The Zimbabwe Stock Exchange Industrial Index tumbled 19 percent last year to trade at 7,4 times estimated earnings, the lowest among nine primary African indexes tracked by Bloomberg.
The country abolished its currency in 2009 as inflation soared following farm seizures in 2000.
While the economy is projected to grow 3,2 percent this year, according to the International Monetary Fund, the lender warned in November of low reserves, a large current-account deficit and weak banks.
Investec, which has decreased its Zimbabwe investments in recent years, only holds Econet Wireless Ltd, a mobile-phone operator, and Delta Corp, which owns brewers and agricultural businesses.
Econet was unchanged at 60 US cents last Friday while Delta rose 1,9 percent to $1,06, the highest since December 24. The estimated earnings ratio for Zimbabwe compares with 12 for the Nairobi Securities Exchange All Share Index (NSEASI) in Kenya and 14 for South Africa’s main gauge.
The MSCI Frontier Markets Index trades at 9,2 times. While Zimbabwe’s stocks may be lower-valued than peers on the continent, it’s above the five-year average of 3,42.
The main gauge rose 1,3 percent last Thursday and Friday, the biggest two-day rally since November 26.
Still, in the past six months, about two stocks fell for every one that gained.
With the sell-off affecting companies from banks to retailers and manufacturers, money managers such as Investec’s Rohm are staying out of the Harare bourse.
“I don’t see a catalyst for change in the near term.” Rohm said.
“The economy’s very weak.” – Bloomberg.
COMMENTS