THE stock market will remain flat in 2014 or give back some gains recorded last year on the back of slower economic growth reflected largely in weak consumer demand and tight liquidity conditions, a leading securities firm has said.
BY OUR STAFF
In its report, 2014 Equities Market Review and Strategy Outlook, Invictus Securities estimated a 10% decline in the industrial index to 181, 90 points and the market capitalisation to contract to US$4,68 billion.
However, Invictus said foreign investors would continue driving activities on the Zimbabwe Stock Exchange (ZSE).
“Our view is that foreign participation will continue to expand to around 60% by year-end. We expect foreign investors to buy on weakness in 2014,” Invictus said.
Last year, foreign trade contributed 50% of total turnover with more buying than selling.
In its stock picks for 2014, Invictus said the good agricultural season was brightening prospects especially for export-oriented business and those with a regional presence.
In the agro-industrial sector, Invictus placed an overweight rating on Seedco, adding that “TSL and BAT are good prospects for investors seeking value preservation”.
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An overweight ratings means that the stock was expected to outperform either its industry, sector or even the market altogether.
It placed an underweight rating on the banking sector saying the level of non-performing loans (16%) was the biggest worry “although we see value in CBZ whose dominance is valuable, while Barclays appears primed for rapid growth once conditions in Zimbabwe improve.”
An underweight stock means the security was expected to underperform its industry, sector, or the market altogether.
Invictus placed an overweight rating on Delta in the beverages sector and said it expects consumption to grow with economic growth and Delta in particular to provide a good entrance opportunity this year as prices decline in response to weak consumer demand.
Invictus placed an overweight rating on the retail sector saying the depressed consumer demand would see growth in revenue generation slow down and margins improving.
“We believe that depressed valuations in 2014 will provide a good opportunity to buy shares in companies like OK Zimbabwe and Innscor,” it said.
