The Sunday Mail
Online Reporter
Investors should not pour money into stocks without carrying out proper due diligence, IH Securities has warned.
It said the need for proper checks for those investing on the Zimbabwe Stock Exchange has been heightened by inflationary pressures that were noted during the third quarter (July to September) of the year.
“We caution against prescriptively applying historical performance to future expectations. The current run on the parallel market is not being accompanied by the same level of growth in inflation figures and it is happening in the presence of increased production unlike in the past,” said IH Securities in its third-quarter review report.
“The current monthly inflation may well be in response to Government spending to stimulate the economy. Now is not the time to indiscriminately invest in any stock with the expectation they will all rise in response to inflation. The majority of stocks are in a bubble.”
Market watchers believe that consumer-facing stocks experiencing real volume growth remain ideal companies to invest in.
“We see a marked improvement in trading volumes for the year ended June 2021, albeit off a low base but signalling that consumer spend may be more robust than expected as lockdown restrictions ease going into the fourth quarter of 2021.”
During the third quarter, the ZSE continued to march northwards, with overall market capitalisation increasing 246 percent on a year-to-date basis in real terms.
