As economic uncertainties weigh on businesses across sectors, foreign investors, who are the major contributors on the Zimbabwe Stock Exchange (ZSE) are also likely to adopt a wait-and-see attitude.

It is, however, stocks with access to foreign currency that are projected to remain rich picks for investors and survive the turbulence.

Already, 2019 has seen a flight of foreign investors from the market, the stock market registered gains in local RTGS$ terms but suffered a massive decline in USD terms.

With no immediate solutions in sight to address the economic headwinds of 2019, key among them inflation and foreign currency shortages, the economic environment is anticipated to remain the same -- subdued and unattractive to investors, which will limit gains.

In 2019, Government had its focus on restoring fiscal stability and sustainability as a way to boost investor confidence and inspire economic growth under the theme austerity for prosperity.

However, the policy measures did not yield the desired result, exposing industry to a continual economic headwind as uncertainties remain the order of the day.

Market watchers, however, contend that investors will keep an eye on counters that are export-oriented.

This has been the trend, as in 2019 such counters dominated the year's top performers.

"Businesses whose revenues are foreign currency hedged together with the dually listed counters will continue to be the favourites in the ensuing year 2020 making the potential market drivers to emerge as Old Mutual, PPC as well as export oriented companies like Padenga, and those in the mining sector Bindura and RioZim," said stockbrokers EFE Securities in their ZSE 2019 review and 2020 outlook report.

For mining stocks, Bindura and RioZim, their foreign currency hedged revenues add to their attractiveness just like most exporters. Bindura's smelter project now at 83 percent completion also remains a major boon to its prospects and the nickel producer is also projected to enjoy a 100 percent upside on its price.

"The seismic economic havoc wreaked by the currency policy changes over the year 2019 were a blessing in disguise for Bindura, as most of the group's major costs came in a weaker local currency while, revenues were in a firm currency," said EFE Securities.

Another favourite, Padenga's foreign currency capacity offers the crocodile breeder a hedge against the economic volatility experienced in the economy.

The group has also diversified into gold mining, another huge boost to its foreign currency earnings although the venture may take up a significant amount for capex to take off the project.

While, restaurant service group, Simbisa faces challenges in its main market, Zimbabwe, which is grappling with inflationary pressures, forex shortages and waning disposable incomes, the group has established strong brands on the market.

This is in addition to its regional expansion, which will remain crucial to its foreign currency wallet and offset any declines experienced in the Zimbabwe market.

After banning of the multi-currency basket, Government, however, granted a green light for tourism and leisure industry in Zimbabwe to accept payments in foreign currency, further creating an opportunity for the Group to at least hedge their revenue while, giving them a source of foreign currency to meet some of their costs that require same.

Analysts also contend heavily capitalised stocks have an ability to quickly adapt to the volatile economic environment and will therefore likely to stand the heat.

The usual bell weather stocks, Delta, Econet, Innscor, BAT, Cassava and Old Mutual among others remain the hot picks for 2020 offering value for investments.

Copyright The Herald. Distributed by AllAfrica Global Media (allAfrica.com)., source News Service English