THE Zimbabwean markets are expected to remain volatile as the new government sets the pace through the budget due next month, a securities and advisory firm has said.
By Business Reporter
Invictus Capital said the country is in wait and see situation as the transition was likely to be lengthy.
“There will be a national budget in late November or early December during which the new Finance minister, Patrick Chinamasa will have to spell out the way ahead.
During this pause to reflect period, the markets in Zimbabwe are likely to be volatile on thin volumes,” Invictus said in its latest report.
“We recommend investors focus on selected blue chips and companies with foreign exchange earnings to protect against a return of the Zimbabwe dollar or funny money alternative.”
The advisory firm reported that the economy grew at more than 9% annually, but slowed progressively to 6% in 2012 and no more than that 3% in the current year.
“This will take the average annual post-dollarisation growth rate to just over 7% a year. At first sight, given the sluggish global economy and political and policy uncertainties, this is an impressive performance, but because the economy is in rebound mode from a very low base the numbers look better than they really are,” it said.
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The report showed that during the multi-currency regime, the country recorded the highest period of growth since 1960.
The firm stated that business costs, notably wages, were rising significantly faster than consumer prices.
The report said companies showed lower earnings increased sales in the first six months of the year which is indicative of the margin squeeze that was underway.
“Growth forecasts have been lowered progressively over the past year to around 3% for 2013 with 2014 unlikely to be very different. Good rains as promised by the weather forecasters would help in 2014, but agricultural production is not constrained by the weather so much as by scarce and costly credit, erratic input supplies and low levels of productivity right across the sector, with few exceptions,” Invictus said.
