THE incoming government has promised to focus on the economy, a move that is likely to boost equity markets, a leading research firm has said.
REPORT BY OUR STAFF
Zanu PF, the party that won the mandate to rule, has said that it would focus on growing the economy.
In a monthly investor note, MMC Capital said the improved economic conditions should translate into enhanced business fundamentals.
“Though present, we are of the idea that macro-economic policy risks will be lower than what the economy has experienced as certainty will be higher in the obtaining environment,” MMC said. “We are of the idea that local equities will retrace for a while but there is room for an upswing which investors need to capture in the current retracement period.”
It said the biggest source of uncertainty, elections, was now out of the way and that “investor confidence with regard local political risk is set to decline”.
“The international community has already lowered the equity risk premium for Zim to levels of around 6,5% from as high as 18%,” MMC said.
MMC said the global economy was likely to be the biggest contributor to equity investor worries as fears of a US Fed tapering were already affecting emerging and frontier market economies as redemptions were escalating.
- Chamisa under fire over US$120K donation
- Mavhunga puts DeMbare into Chibuku quarterfinals
- Pension funds bet on Cabora Bassa oilfields
- Councils defy govt fire tender directive
Keep Reading
“Bond and equity markets in these economies are set to decline further and Zimbabwe is not an exception,” MMC said.
However, MMC said policy processes by the new government may cause uncertainties in the local economy in the short to medium term as investors assess the situation and weigh options.
Already the Zimbabwe Stock Exchange (ZSE) has taken a knock attributed to the uncertainty caused by the just-ended harmonised elections the opposition say, was rigged in favour of Zanu PF. Over U$1 billion in shareholder value has been lost as a result.
ZSE gives a clear picture on what is happening in any economy and its movement is closely followed by investors.
