HARARE — Investors remain averse to trading on the Zimbabwe Stock Exchange (ZSE) amid concerns over policies that are likely to be pushed through by President Robert Mugabe following his victory in July’s elections.
Traders have been jittery about possible plans to reintroduce the Zimbabwe dollar, for example, although Gideon Gono, governor of the Reserve Bank of Zimbabwe, last week denied that the new Zanu (PF) government would reintroduce the unit, replaced in February 2009 by a multicurrency system.
The ZSE reopened on Wednesday after a break for the Zimbabwean Heroes’ Day and Defence Forces Day holidays on Monday and Tuesday.
Foreign investors sold off $2.6m worth of shares while foreign purchases amounted to $1.8m in Wednesday’s session.
The industrial index slid 2.5% and the mining index fell 3% on Wednesday, adding to the market’s overall 11% decline recorded last Monday — with a further 2.2% drop seen during the course of last week.
Although government officials such as Mr Gono have tried to reassure investors, worries remain. Traders on the ZSE said on Wednesday they expected the downward spiral in stock performance to persist until there was “clarity on issues”.
Foreign investors on the local equities market are also expected to continue selling off their holdings, at least for now, the traders said.
“Investors are still keen to exit their portfolios. It’s mainly the foreign investors that are selling off and they are getting desperate to sell-off,” one broker said.
Wednesday’s trade saw the ZSE’s market capitalisation ease below the $5bn mark, while most of the bourse’s attractive counters traded in the red.
Delta Corporation, the local unit of global brewer SABMiller, shed 4.2% to close the day’s trading session at 114c.
Other counters that traded down included OK Zimbabwe, down 4% at 24c, and SeedCo, down 1.23% at 80c. Dual-listed PPC and Old Mutual declined 2.27% and 4%, respectively.
“The ZSE’s market cap fell below the $5bn mark on Wednesday as the market continued on a downward spiral. Turnover remained firm at $3m, however,” said market analysts at Lynton Edwards Securities in a report on Wednesday afternoon.
Few stocks traded in the black, with Dawn the top riser, up 10% to 99c, and local bank FBC climbing 5.56% to 9.5c.
On Friday, the industrial index had been 15.22% weaker from the previous week while the mining index was 12.65% lower.