Zimbabwe Stocks May Gain 5-fold in 2009, RenCap Says

By Janice Kew
July 29 (Bloomberg) -- The market value of Zimbabwe stocks may rise to $5 billion by the end 2009, a five-fold gain from an estimated $1 billion in February when trading resumed after a three-month closure, according to Renaissance Capital.
The market capitalization of shares on the Zimbabwe Stock Exchange has a 10 percent chance of reaching $5 billion by the end of this year and a 60 percent possibility of increasing to $4.5 billion, from $4.08 billion yesterday, analysts led by Harare-based Dzika Danha wrote in a research note today.
Reserve Bank of Zimbabwe Governor Gideon Gono ordered the shutdown of the exchange in November, alleging some traders were engaged in fraud, as President Robert Mugabe blamed pressure from western countries for pushing the economy toward collapse. The exchange resumed trading in U.S. dollars on Feb. 19, a week after a new coalition government was sworn in under a power- sharing agreement between Mugabe and opposition leader Morgan Tsvangirai.
Under the coalition agreement, which ended a decade-long political impasse, a new constitution must be agreed on and elections held within two years of that. Mugabe is delaying talks on a new constitution in a bid to scuttle the country’s coalition government and avoid elections in which he may not be allowed to compete, two members of his party’s decision-making body said earlier this month.
“Despite the noise, Zimbabwe’s political parties appear committed to a unity government” and an economic recovery is “under way,” according to the note.
African Sun
The market value may rise to $7.1 billion by the end of 2011, a 74 percent increase from yesterday’s closing value, the Renaissance analysts wrote.
African Sun Ltd., the hotel company with assets across the continent, Econet Wireless Holdings Ltd., the country’s biggest mobile-phone operator, and Delta Corp., Zimbabwe’s largest beer and beverages maker, are among Renaissance’s top 10 picks
Renaissance initiated coverage of Pearl Properties Ltd., Art Corp. Ltd., Dairibord Holdings Ltd. and PG Industries Ltd. with “buy” recommendations. The four stocks are also among the brokerage’s top 10 picks.
Pearl’s commercial properties should command “comparatively higher returns” because they are modern and situated in “key locations,” the brokerage wrote.
Art Corp., which manufactures and distributes paper and plastic products, benefits from “strong brand recognition,” it said.
To contact the reporters on this story: Janice Kew in Johannesburg at jkew1@bloomberg.net. Last Updated: July 29, 2009 06:56 EDT