'Zanu PF succession wrangle spooks investors'

HARARE - The on-going succession battles in the ruling President Robert Mugabe-led Zanu PF have taken a toll on the economy, with the Zimbabwe Stock Exchange (ZSE) extending losses.

According to Lynton-Edwards Stockbrokers (Les)’s latest Investor Alert report, the bourse experienced its worst performance in October after it tumbled by -8,89 percent, surpassing the year's record loss of -7,13 percent registered in March.

On the other hand, the resources index recorded its second biggest monthly fall in October after losing 24,12 percent, slightly below the 2014 monthly record loss of 24,79 percent, also recorded in March this year.

“The country’s leadership has not helped matters either with the month of October having been characterised by political bickering, and in the process increasing the country’s political risk,” Les said in the report.

“Investors normally shy away from countries where chances of political changes or instability are heightened, like what is happening in Zimbabwe at the moment,” the stockbroking firm said.

It added that “reports of high profile government officials being correctly or falsely fingered in corrupt activities are also unnerving investors.”

“A total 38 stocks closed in the red on the ZSE in the month (October), with 12 of them recording losses above 20 percent,” said Les.

The firm noted that the depressed performance on the equities market is a “clear reflection of the deteriorating economic environment that has continued to worsen with each passing day”.

This comes as Zanu PF — a former liberation war movement — is currently embroiled in a vicious power struggle to succeed its 90-year-old leader, Mugabe, who has been at the helm since 1980.

Vice president Joice Mujuru and Justice minister, Emmerson Mnangagwa, are seen as the leading contenders.

Market experts say the lingering uncertainty over Mugabe’s succession, coupled with concern over his age and health, has divided his government and consequently spooked investors.

IMF recently said the country needs to fast track the country’s policy reform agenda.

According to the director of the African department of IMF Antoinette Sayeh, Zimbabwe needs to balance the primary fiscal budget, restore confidence in the financial sector, address debt challenges and enhance the business operating environment.

The Reserve Bank of Zimbabwe has also voiced its concern on the economy with deputy governor

Kupukile Mlambo saying the country’s economy is failing to respond to regional growth trends, a development that needs national attention.

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