Andrew
Enacy Mapakame
Experts in capital markets say every economic case presents a buying opportunity for investors, be it on the equities market or money market, albeit the risk factors differ.
For equities, the declines experienced during the second half of the year, post- April, have created a vast opportunity for first-time investors to venture into the stock market.
Stocks rallied 162 percent between January and April before they took a dip following policy interventions introduced by Government to tame the run-away inflation and arbitrage behaviour on the market.
In May, the Zimbabwe Stock Exchange (ZSE) fell 19 percent and recorded monthly declines of 14 percent, 16 percent and 17 percent in June, July and August, respectively.
The total market capitalisation is at around US$1,8 billion, down from a peak of about US$10 billion.
During the four months to August, portfolios halved, although September experienced some 8 percent recovery.
Fund manager at Old Mutual, Chenge Zvobgo, said the crash experienced on the
equities market presented a perfect time to invest.
“If you are thinking of investing on the equities market, this is the perfect time,” he said.
“If you are a first-time investor, it’s a no brainer, just jump onto the equities market,” he said during a virtual discussion with stakeholders in capital markets.
He, however, emphasised the need to engage experts to provide guidance on building a solid portfolio to realise meaningful returns.
Professional advice will also help investors understand the risks associated with stock markets.
“There is scope to invest. What one needs is to clearly outline their objectives, their risk appetite, how much to invest and expectations. You need to discuss these with an expert,” he said.
Another fund manager at Old Mutual, Tawanda Zuze, concurred, adding investment research becomes crucial for investors to understand the potential risks and opportunities in the obtaining environment.
For the equities market, there are several risks. They include market, liquidity and inflation risks. These risks create scope for engaging experts on potential opportunities.
Mr Zuze said while the money market is less risky compared to equities, the two investment options do not compete with each other but play a complementary role to each other.
During the first quarter of the year, the equities market shot up in an inflationary environment while the money market struggled. However, the second half of the year has seen the equities market struggling and the money market flourishing.
“There is always an investment case, which is why it is important to engage experts to point out the available opportunities and risks. There is always a green shoot in every grey area,” he said.
Online Reporter