adminthe market because none of the negative factors have been addressed.
The market has been recording gains from last week but it would not sustain the upward trend as foreign investors who keep up the market are on a few selected counters.
Foreign investors are particular about uncertainty surrounding the indigenisation policy, which seeks to empower local black Zimbabweans.
Uncertainty is also in other economic policies including change in currency from the multiple currency system to the Zimbabwe dollar as well as unclear dates for elections.
The Zimbabwean market reacted to the Euro debt crisis last year and the influence has continued into 2012. Lately the market was unfazed by the news from Europe but the market has given in as foreign investors restructure their portfolios.
The Euro debt crisis continues to be one of the key issues driving the selling pressure in the markets as foreign fund managers seek to exit perceived risky assets.
The general low liquidity condition in the economy is expected to continue in the year and is likely to be the main ingredient for the poor performance of the market.
“The industrial index should remain depressed largely because none of the driving causes have been addressed. At best it should be flat in the first quarter of the year with a chance of losing about 5 to 10 percent in the year,” said a local dealer.
Last year, the main industrial index lost 6 percent to close the year at 142,90 points while the resources index shed 50 percent to cap off at 100,70 percent.
Notwithstanding that the stock market is reeling deep in the negative with investors both local and foreign trading squarish due to uncertainty on the risk-return trade-offs of the local stocks, the stock market remains a lucrative investment avenue.
Despite depressed activity, it is the discretion of rational investors to take advantage of the grossly undervalued stocks.
Some stocks to watch during 2012 are Delta, Econet, OK Zimbabwe, Hippo, Lafarge, FBC, Seed Co, Innscor, Pearl and Edgars.
Online Reporter