ONE of the country’s leading securities firms, Morgan & Co, has maintained a bullish outlook on the Zimbabwe Stock Exchange (ZSE), particularly for liquid stocks and those with solid fundamentals.
It said companies such as SeedCo Limited, Delta Corporation, and Econet Wireless are trading below their fair price estimates, presenting investors with significant upside potential and real dollar returns that could exceed those offered by traditional deposit facilities.
“Despite the reserve bank’s tight monetary policy stance, we think that there will be some improvement on activity on the Zimbabwe Stock Exchange on account of possible seepage of Zimbabwe Gold (ZiG) from the targeted finance facility (TFF), lower forex retentions for exporters, and a crackdown on parallel market agents,” Morgan & Co said.
“We think that the returns being offered by a US dollar-denominated deposit facility
(USDDDF) will be far outweighed by the possible returns that can be earned on the ZSE.
“USDDDF was introduced in the 2025 monetary policy statement announced last week.
“Several companies with solid fundamentals are currently trading well below their fair price estimates and could offer exporters real returns exceeding what can be offered by the USDDDF.”
The securities firm maintained its equity strategy centred on liquid stocks, with solid fundamentals, and that currently exhibit price weakness.
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“We remain bullish on Seed Co Limited given the rebound in seed demand that has been driven by government programmes, the need to improve the strategic grain reserves, and above average rains in the 2024/25 agriculture season,” it said.
“The counter is currently trading at USD equivalent price of US6c compared to our fair price estimate of US34c. We also recommend investors to take positions in the ZSE’s most liquid stocks — Delta Corporation and Econet Wireless — which have potential real dollar returns of at least 50% over the course of the year.”
Despite expectations of higher exports in 2025, Morgan & Co did not expect much change in the Victoria Falls Stock Exchange (VFEX) stocks price levels because of lower forex being made available to exporters which will nullify these positive forex inflows.
“We also reiterate low foreign investor participation and low confidence in formal channels as further deterrent’s to activity on the exchange.”
ZSE’s monthly turnover reached ZiG200 million in January, with Delta contributing ZiG74 million and Econet adding ZiG67 million. This marked a decrease from December’s turnover of ZiG225 million, which was driven by Delta and Econet.
The bourse saw an 11% drop in market capitalisation, following an 18% decline in December 2024. The All-Share Index fell by 10,12%, largely due to significant losses in the Top 10 Index and the Top 15 Index.
However, the Medium Cap Index saw a slight gain of 0,05%, while the Small Cap Index remained steady at 100,11.
VFEX market capitalisation dipped by 1%, and turnover declined by 41% to US$11,6 million from US$19,6 million recorded in December 2024. January’s turnover was primarily fuelled by Natfoods buybacks totalling US$9,2 million, while December’s activity was driven by Simbisa and Innscor trades on December 5th.
“We believe that equities have been significantly impacted by the liquidity crunch, leaving many major counters undervalued and still below their historical averages. This creates attractive buying opportunities for investors,” Fincent Securities said in its latest report.
Lately, the economy has been battling a liquidity crunch which has been a result of the central bank playing its hand in maintaining a tight monetary stance to combat inflation and foster exchange rate stability.
Retailers and manufacturers have borne the brunt of this situation to a larger extent, with players in both sectors seeking corporate rescue and in worst case scenarios, scaling down their operations.
Meanwhile, Morgan & Co said efforts to stabilise the local unit were facing resistance from the parallel market, where leaks from the TFF and shifts in foreign exchange retention policies threaten to fuel illicit trading, experts warned.
To counter these pressures, the organisation stressed the need for complementary measures to support the formalisation of the economy.
l Exchange rate as at January 31, 2025: US$1:ZiG26,4
