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Foreign investors bought more shares on the Zimbabwe Stock Exchange in the first quarter of this year compared to the same period last year although total market value had declined significantly by March from its year opening levels.

A total of 687,2 million shares exchanged hands on the bourse in the first quarter of this year compared to 560,6 million over prior comparative period, with foreigners accounting for the bulk of the trades, which is an indication investors are still keen to stick it out despite the bearish trends.

The ZSE market capitalisation declined from $4,88 billion in January from $4,66 billion by the end of March, but while market capitalisation declined, foreign investor buyers exceeded those sellers in the first quarter, taking aantage of the bearish market to swoop on cheap stocks.

Foreign investors are an integral part of the ZSE, accounting for well over three quarters of the $118,6 million turnover realised this quarter from $120,3 million in 2013.

The foreign investors bought about 341,4 million shares in the first quarter of this, a significant increase compared to the 270,1 million shares they bought over the same period last year.

However, sellers increased this year with a total of 222,3 million shares sold by foreign investors compared to 190,2 million shares the foreign investors sold in the first quarter of 2013.

The participation of foreign investors, who are more liquid compared to their domestic counterparts and therefore drive the market, tapered off in February with shares bought totalling 67 million and sales 37 million compared to 105,8 million and 48,2 million, respectively, a month earlier.

But market analysts said this week that foreign investor activity has picked up on the ZSE with notable activity being noted in blue chips such as Econet and Innscor and Delta.

Market analysts, however, do not expect the market to recover lost ground in the first half of this year, but predict it will bounce back in the second half to creep back the $321,8 million lost to bearish sentiment for the most part of 2014.

They believe the coming of reputable foreign investors, such as in case of Atlas Mara Co-Nvest Limited (Atlas Mara), which has entered into conditional purchase agreements with selected shareholders of ABC Holdings, would augur well for the recovery of the stock local market.

London Stock Exchange-listed Atlast Mara Co-Nvest Limited is acquiring, for cash or shares, ABCH shares representing 50,1 percent of the total issued ordinary shares at a price of 82c per share or the equivalent in Atlas Mara Co shares in a transaction valued at $265 million.

While many foreign investors have tended to continue sitting on the fence watching developments in Zimbabwe, especially relying on negative and distorted reportage in foreign and hostile local media, those that have dared to swim against the tide and invested have had little regrets if any.

Further, market watchers said the expected bumper harvest expected this agricultural season should do well to pamper the confidence of foreign investors to bring more funds.

However, they pointed out that it remained imperative for Government to keep attend to issues of policy inconsistency and uncertainty to attract the often timid foreign capital, which tends to scrutinise trends in national politics.

Following a decade of economic highly volatile instability stretching to 2008, Zimbabwe is still trying to rebuild its economy, and savings base, for the liquidity local investors require to actively participate on the local bourse.

Source : The Herald

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