Zanu-PF turmoil plunges Zimbabwe stock exchange

Zanu-PF turmoil plunges Zimbabwe stock exchange


ZIMBABWE – Shares on the Zimbabwe Stock Exchange (ZSE) hit a fresh seven-year low on Tuesday, when heavyweight counters, Barclays, OK Zimbabwe Limited and Innscor Africa Limited led the fall as the industrial index slid below the psychological 100 points.

The industrial index eased to 99,8 points on the fateful day, 0,59 percent lower than the 100 points set when the bourse rebased on February 19, 2009.

Yesterday, the industrial index crushed further to 99,39 points, losing 0,41 percent of its previous value.

As of yesterday, the industrial index had lost a cumulative 13,16 percent of its value in 12 months.

This brings to the fore the crisis facing the equities market where investor sentiment has been affected by low returns, a volatile political situation and declining corporate earnings.

But on Tuesday and Wednesday, the mining index remained unchanged at 18,74 points.

This week’s developments mean the market is now in a much worse condition than it was on the first day of trading in a dollarised environment in February 2009.

The ZSE crashed at the height of the hyperinflationary period in 2008, when charging zeroes on the Zimbabwe dollar crippled trading, resulting in authorities shutting down the bourse until 2009.

On February 19, 2009, the equities market kicked off trading again, with the industrial index rebased to 100 points.

The domestic equity market has been bearish for the past five years.

About US$1,5 billion in value was lost on the ZSE between January last year and January this year, as the bourse grappled with a myriad of problems.

Tuesday’s developments sent panic among stock market analysts, who said this was a reflection of investor sentiment in the country, which has recently been affected by infighting in the ruling ZANU-PF.

Economist, John Robertson, said apart from the political crisis, the indigenisation and economic empowerment levy currently under consideration would affect profits and drag companies further into the woods.

“The manufacturing sector is shrinking,” said Robertson.

“They have lost their suppliers and customers and there are very few dividends being paid. Manufacturing companies have become import agencies for foreign companies because they are no longer producing.

“This has affected profitability. The prospects for the future are bleak because most manufacturing firms were started by non indigenous people whose profits will be eroded,” he said.

“Discouragement and very weak market sentiments are affecting companies and investor sentiment,” another analyst said.

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