ZSE is world's best-performing bourse

HARARE - Zimbabwe's $3,3 billion stock market is up 22 percent this month, more than any of the 94 equity indexes tracked by Bloomberg globally.

Zimbabweans are piling into equities to preserve their wealth as the government plans to introduce a pseudo-currency called bond notes, stirring memories of the hyperinflation that plagued the southern African nation until it abandoned its own currency in 2009, according to Welcome Mavingire at Intellego Investment Consultants in Harare, the capital.

“Fear is driving the rally,” he said.

The government, however, insists that the introduction of bond notes would be good for the struggling economy.

The local bourse’s industrial index, which has been on the back foot for the past three years, this month resurged to breach the 100 point-mark for the first time since August 24, despite an absence of positive news for companies battling to recapitalise and turn around their fortunes.

Some financial experts contend that the demand for stocks has been rising since government indicated that it had little fiscal space to pay maturing Treasury Bills, indicating that it would roll them over.

The 100-point-mark was benchmarked in February 2009 after the country embraced a multi-currency system, having given up the Zimbabwe dollar, which succumbed to hyperinflation.

Leading to the benchmarking of the bourse, trade on the equities market had been halted in 2008 as a consequence of the hyperinflation.

Towards the end of 2008, hyperinflation, estimated at 500 billion percent at the time, had caused nightmares to the authorities as they could not cope with the resurgence of zeroes on the domestic currency, which had the effect of pushing share prices beyond ZW$30 quadrillion in November 2008, causing computer systems to crash.

Companies whose share prices have rallied are in the league of blue chips, including Delta, which is well managed and has strong brands.

Delta has good cash generation capacity and is well capitalised.

There is also the financial services behemoth, Old Mutual, which many believe is a good store of value.

Comments (2)

ZSE best performing stock exchange is a mockery considering the market capitalization. Its similar to comparing a one person who sells one tomato day with shop that sells several tomatoes a day but not all. % comparison is not the only way of comparing a stock exchange. This statement is both mischievous and extremely false

amina - 28 October 2016

Old Mutual in Zimbabwe are USD 3.20 vs 2.45 USD in SA and London. A 30% premium meaning that when the bond notes arrive they will instantly be worth 30% less than a USD. The financial markets are hardly ever wrong. So if you have USD in a bank & cant get it out buy Old Mutual plc in Zimbabwe at any good stockbroker !

nelson moyo - 28 October 2016

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