Things working again

For those who do not know me. My name is Nyasha W. Chasakara. I hold an Economics Degree from the University of Zimbabwe and have been working in Zimbabwe’s investment markets for more nearly a decade. A couple of years ago I used to write on economic and investments matters, offering advise to those who were willing to take it!. I stopped when things seemed to stop working. Who can blame me? Things are working again so I am back. Once a writer always a writer, Right!

It’s a brand new year and we have been using foreign currency as our legal tender for just under a year now. Back in the day (January 2009 to be exact) as my grandfather used to say things were different, our stock market stopped working, shops started selling their products in return for fuel coupons and hard currency ( if you had the licence that is) When hyperinflation was rife it was almost like fiction. Looking back to some of the articles I posted nothing was predictable, planning was impossible and yet all that has changed.

It was unthinkable to let your car fuel tank run to E and then look for the nearest service station to re-fill. You were asking for trouble. Now you can choose which service station you want, what time you want and how much you want. There is no doubt that life is much easier, thanks to the sanity introduced by the use of foreign currency as our legal tender (money). Money is real now.

The important thing is if you are reading this we all survived to tell the tale. Sadly not everyone did. It doesn’t get any real than that. Hyperinflation is something that should never again be experienced in our country or any other for that matter. Those who survived have many explanations on how they pulled through, ranging from God’s will for the devout to sheer genius for those who went to school (the learned ones, the trickisters, the dealers)!

Who has not heard of the term ‘burning’? It became a term used to describe the buying and selling of foreign currency, making margins in the process. Everyone became a mathematician over night, speaking of points, margins, spreads etc. Our survival instincts sprang up and we did what had to be done to survive.

Referring back to the little Keynesian Economics that I can remember we all made our little decisions in order to survive. It all makes sense to me now, how micro-decisions have macro-economic impact. We all pursued real assets, hard currencies and anything that could preserve value, raising prices of everything and because no company was producing enough, we all know what happened afterwards. Our local dollar fell in value becoming unusable, because we invested in consumption.

Enough of the history, Phew! That was then. As I write today we have a functional economy. One, where planning is possible: a prerequisite for success. We now worry less about what tomorrow has in store for us. It is a good feeling to have. For those with spare cash (there is very little of that I available of late), this is the time to take calculated risks and invest in the country.

Judging from the number of capital raisings on the cards by listed companies, the problem of liquidity and capital is not just affecting individuals. Inflation also decimated a lot of companies' capital base, hence the call for new capital. Looking at the just ended African Sun rights offer in which 61% of the $10m they were looking was raised, the underwriter took the rest, so all that money was raised , there is some appetite for Zimbabwean assets. Investors love Afrisun even though it is not making money at the moment. Africansun is what I would call an economic recovery play. It’s a company that will not make you money in the short-term but will make you lots of money when tourists start flooding our hotels. Would I buy it? Yes! Because tourists are coming to Zimbabwe.

The tourism sector just like the telecommunications sector (sweet Econet) are industries of the future, there is heavy capital investment to begin with, followed by years of cash-inflows, as the companies sell an improved product. Disposable incomes will improve so will spending. So do not despair. Your investment will pay off one day. African Sun became one of the first companies to share their financial results with the market last week. They revealed that 2009 was one of their worst years. Management said that their fortunes have already turned. Forward bookings to March reflect a doubling of occupancy in its resort hotels. This coming ahead of the 2010 FIFA world Cup showcase on in neighboring South Africa in June. I will leave it at that. Happy hunting.