Gloomy sentiment persists on ZSE

HARARE - Zimbabwean stocks traded in the red for a second consecutive day with analysts denoting investors’ worry over President Robert Mugabe and Zanu PF’s win.

This comes as the stock exchange, which normally defies convention, rallied in the run up to the July 31 harmonised election to hit an all-time high since dollarisation in 2009.

Mugabe — who has been at the helm of Zimbabwe for the past 33 years — romped to a 61 percent victory, beating long-time rival Movement for Democratic Change leader Morgan Tsvangirai.

Tsvangirai has contested the 89-year-old Zanu PF leader’s win, creating tension some analysts say further raised anxiety and spooked investors.

Yesterday, the bourse’s key industrial index — which plunged a massive 11 percent on Monday — retreated by a further 1,7 percent to close at 202, 03 points. The Monday fall, in the first trade since Mugabe’s election victory, is the market’s biggest decline in one-day since 2009.

Among the biggest losers yesterday were South Africa-based Pretoria Portland Cement that shed $0,10 to trade at $2,20, hotel group Meikles Africa down $0,06 to $0,26 and milk processor Dairibord Zimbabwe Limited Holdings which lost $0,04 to settle at $0,22.

Insurer First Mutual Life dropped $0,04 each to trade at $0,12 while mobile network operator Econet Wireless Zimbabwe and financial services group FBC Holdings both traded $0,03 lower at $0,55 and $0,09 respectively.

On the upward trend were insurance giant Old Mutual which advanced $0,08 to $2,50 and supermarket chain OK Zimbabwe up $0,01 to $0,27.

Analysts said the two-day depressed trade on the equities market, which earned investors a staggering 40 percent return in the half year to June 2013, is the clearest sign yet of how investors are wary of the Zanu PF win.

John Robertson, an independent economist, told businessdaily that marked fall of the capital market “displayed collapsing confidence after the election results.

Market traders are dismayed and it seems everyone is trying to sell at the same time.

Although the change of shares ownership may not directly affect the company, it only shows that investors are not optimistic about the future, so they sale,” he said.

“It is a true indication that foreign investors do not have faith in a Zanu PF-led government because of its long standing history of implementing poor policies. It will take a long time for this government to be trusted,” Robertson added.

Another analyst who preferred anonymity said Zanu PF’s policy inconsistencies was their biggest undoing.

“This is the highest decline ever in a day. There are a lot of questions whether they will continue with the good policies implemented under immediate past Finance minister Tendai Biti, who his successor is, the issue of the Zim dollar and how the indigenisation thrust will come into play?” he said.

Another major worry among most investors is fear that the Zimbabwe dollar may be prematurely reintroduced.

While there is no clear timeframe as to when the local currency would be brought back, Mugabe has hinted on the local currency return.

However, he told a pre-election political gathering that a Zanu PF government would not rush to reintroduce the Zimbabwean dollar if elected to power, as the party is mindful of avoiding a repeat of the hyperinflationary period experienced before the multi-currency system was adopted in 2009.

 

Comments (2)

These are ominious signs, more to come. News papers would be counting closures like another ballot, for real things on the ground not this hullaballoo going on at the moment. Time will tell who the devil is.

theresa - 8 August 2013

This situation doesn't need a rocket scientist ,the writing is on the wall business doesn't agree with ZANU policies .Investors are now taking what ever is on offer just to disassociate themselves with this economy because as it is there is no confidence insight for one to work on.ZANU PF can not be trusted but at the end they will who is in charge economicaly.

CASHTALKJ - 9 August 2013

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