Zimbabwe Stock Exchange (ZSE) shares have been on an upward trend since January 2023, mostly due to advances in large cap firms, which market observers expect to continue in the near to medium term.
Delta, Econet, Hippo, OK Zimbabwe, and Tanganda are predicted to maintain their gains on the Zimbabwe Stock Exchange (ZSE), while Simbisa and Innscor are projected to drive both volumes and prices on the Victoria Falls Stock Exchange. (VFEX).
However, inflationary pressures and other shocks may outweigh any additional advantages that are anticipated.
“We anticipate a general bullish sentiment to prevail on the stock market; however, gains may be moderated by the Government’s inflation tightening measures,” stated the report.
Investors may therefore consider stocks with a strong cash generating capacity, strong asset base with ability to stand the economic headwinds. For Delta, which is the biggest counter by market value on the ZSE, it boasts of a diversified product portfolio of local and international brands, inclusive of non-alcoholic beverages, sparkling beverages, lager beers and traditional beers.
The anticipated economic growth this year is also expected to boost demand for its products going forward.
“Ahead of envisaged growth in key economic sectors such as mining, agriculture and construction, we anticipate firm aggregate demand for the company’s products,” said FBC Securities.
As for Econet, it has maintained dominant market share and cemented its position as a market leader in the telecoms sector and has also launched the 5G network, which will improve customer experience and enhance product offering.
Additionally, the introduction of the multi-pricing regime will improve foreign currency generation and aid in covering the company’s core operational costs from infrastructure and software upgrades that require foreign currency.
On the agriculture side, Tanganda’s dominance in the local tea industry, and its presence in the growing macadamia and avocado markets set the basis for a favourable outlook on the company’s future prospects.
The same can be said of Hippo, which is the biggest sugar producer in the country.
Said FBC Securities “While there is a possibility of price pressure in the exports market, we anticipate sustained demand in the local market on the back of improved consumer disposable incomes.
“Hippo Valley’s dominance in the market plus the anticipated increase in output drive a positive outlook for the company’s performance.”
Elsewhere, the VFEX has been struggling with liquidity challenges, but the increase in counters migrating from ZSE is seen enhancing liquidity.
“The increasing number of quality stocks listed on the VFEX will aid in boosting activity and improving liquidity.
“ Increased flow of foreign currency within the formal economy will also be key to driving activity on the VFEX with some of these funds directed to the stock market,” said FBC Securities. Innscor and Axia migrated to the US dollar denominated exchange this year.
Hospitality group, African Sun and financial services provider FCB have also indicated plans to migrate in a trend analysts project to continue as companies seek to hedge against currency and exchange rate volatility.