ZSE bearish in 2015 as economy struggles – Report

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THE equities market is seen maintaining a bearish trend this year on the back of prolonged poor economic performance underpinned by liquidity constraints that characterised much of last year, a local brokerage firm has projected.

Year on year, the industrial index lost nearly 20% in 2014 having pared off almost $1 billion in market capitalisation,  reflecting a sick underlying economy and in its economic outlook for this year, MMC Capital said the trend would likely persist.

“Locally, our view is that the market will likely remain under pressure this year on the back of poor operating fundamentals in Zimbabwe,” MMC said in the report.

“We still hold our view that investment opportunities in Zimbabwe remain plenty, but funding will persist to be the biggest challenge for the economy in 2015 as the majority of sectors continue to suffer from capital deficiencies.”

The World Bank sees Zimbabwe’s economy growing by 3,2% this year — faster than the global average — and pick up to 3,7% next year but MMC said liquidity constraints, falling industry capacity utilisation and waning government revenue would continue to be the major impediments.

“Our view is that the local market will likely remain under pressure on the back of poor operating fundamentals. Escalating economic headwinds will continue to hamper sustainable economic recovery.

Economic sectors to watch in 2015 include construction, electricity and water,” it said. It said equities market investors should consider investing in companies that have good corporate governance, solid fundamentals and foreign market exposure to cushion them from an underperforming economy.

–  The source