ZSE loses $1 billion

HARARE - Zimbabwe's equities market has lost nearly $1 billion in one week following the controversial re-election of President Robert Mugabe.

The southern African country’s bourse — which had a market capitalisation of $5,96 billion before 89-year-old Mugabe's election victory — plunged a combined 15,68 percent to close the week at $5 billion.

Notable blue-chip counters such as Delta Corporation, Econet Wireless Zimbabwe and Innscor Africa Limited closed the week in red shedding 0,83 percent, 1,82 percent and 5,65 percent respectively.
Retail giant OK Zimbabwe shed 0,75 percent.

Economic experts say the continued bearish run on the Zimbabwe Stock Exchange (ZSE) is due to cautious trading by foreign investors who fear that Zanu PF’s boosted majority could embolden it to pursue even more radical economic nationalism of the kind that led to violent seizures of white-owned farms after 2000.

“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,” said economist John Robertson.

Although volumes however, remained firm with more than $4,2 million worth of shares changing hands, foreign investors sold $3 million worth of their stocks on Friday and bought only $2,5 million stocks.

“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,” said Robertson.

According to market watchers, foreign investor participation contributes 46 percent of trade carried on the local bourse.

Last week’s election, criticised as “seriously compromised” by independent domestic observers in Zimbabwe, ended a fractious unity government between Mugabe’s party and Morgan Tsvangirai’s MDC that was brokered by Sadc after violence marred a 2008 vote.

While election observers from the African Union and the Southern African Development Community (Sadc) broadly approved the July 31 presidential and parliamentary elections, the election has met serious questioning from the West.

The United States said it does not believe Mugabe’s re-election was credible, while the European Union has also expressed concerns over alleged serious flaws in the vote.

Despite many social commentators crediting the unity government with achieving a measure of economic revival after a decade of recession, Mugabe on Wednesday presented a different view, calling “the immediate past ... retrogressive because of the inclusive government”.

“We must now raise the standard of living of our people,” he added.

Tsvangirai, who has vowed his MDC will not participate in any government formed by Mugabe following this election, was expected to present a legal challenge to the results yesterday.

The constitution says the courts must rule on the case within 14 days.

Mugabe will be sworn in only after the courts give the all-clear to any legal challenges, this being the most likely expected outcome given Zanu PF’s dominance of the Judiciary and the institutions of state in Zimbabwe.

Mugabe, re-elected for a fresh five-year term after 33 years in power, showed no signs of ill health. He has been the subject of health rumours because of numerous visits to Singapore in the last three years for medical checks.

He travelled to Singapore in June for another check-up just weeks before the July 31 elections.

 

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