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Investors eye Zim with caution
03/04/2008 15:53 - (SA)
Johannesburg - Roelof Horne, portfolio manager on Investec Asset Management's frontier markets team, says Zimbabwe is widely
touted as a recovery play and it is thus not surprising that Zimbabwe-exposure stocks have started rallying in the last two days as the opposition party started claiming a landslide victory.
"Investors are clearly optimistic that a change of government might, just might be on the cards," he says.
"In terms of our investments, the biggest potential (opportunity) loss for our funds is our low exposure to the country. Our funds do not own stocks on the ZSE - we looked into the possibility, but a lack of liquidity and exorbitant transaction costs have kept us away. Our Zimbabwe exposure is limited to stocks listed in London and Sydney, but it constitutes less than 3%
of our funds," he adds.
"Should the status quo remain, we will wait patiently for change, building our exposure to the country as opportunities arise. Should there be a change of government, whether electoral or negotiated, we would expect a substantial rally in assets related to Zimbabwe - a rally that will probably over-anticipate the speed at which an economic rebuild can follow political change,"
says Horne.
"So instead of hopping onto the bandwagon, we are quite satisfied to sit back for the moment, wait for change, and miss the first wild scramble that will inevitably follow positive political change."
Horne points out that the country has been starved of investment, both internal and external, for the last eight years.
"The economy will take time and capital to rebuild. We would welcome the opportunity to invest in a new Zimbabwe post-Mugabe. We will do so methodically, following our usual systematic analytical approach, searching for good companies, with good management and prospects, at a good price.
"There will be great opportunities for investment gains, and we will be there," he concludes.
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