HARARE – As the country’s economy continues to die, the Zimbabwe Stock Exchange (ZSE) hit a seven-year low on Wednesday, as foreign investors flee the market as if it’s infected with the deadly Ebola virus.
Although the ZSE once ranked among the biggest and best performing bourses in Africa, investors have known nothing but pain since President Robert Mugabe and Zanu PF won the hotly-disputed 2013 national elections — with the bourse losing more than $3,4 billion of its value over the past three years alone.
The exchange, which has operated from Harare since 1951, now has a paltry 63 listed companies, with a total market value of $2,5 billion — down from an all-time high market capitalisation of nearly $6 billion that was recorded in the first week of August 2013, just after the end of the stability-inducing government of national unity.
Market watchers who spoke to the Daily News yesterday said the low trading levels that were being recorded on the ZSE were “clear evidence of weak investor sentiment over the country’s political leadership and their stewardship of the economy”.
“We are likely to see this downward trend continue throughout the year, as there is no evidence of the government’s willingness to revive the economy.
“In the absence of strong political will to embark on key economic reforms, we expect the economy to weaken further and the sell-off by foreign investors to continue,” a trader with a local stock-broking firm said.
His comments came after foreign sell-offs dominated Wednesday’s trade at $122 418, compared with foreign inflows amounting to $67 441.
Economic experts said the low turnover levels were having a significant negative impact on the viability of the stock market, local stockbrokers and the Securities Exchange Commission of Zimbabwe.
Early this month, ZSE chief executive Alban Chirume said the bourse was in the process of cutting jobs and would also soon announce a strategy to generate additional income, after revenue fell by half in 2015, amid little signs of recovery in the foreseeable future.
“The continuing low trades and lack of approval of new products has necessitated the need to review our cost structure,” he said.
Experts have also noted that the ZSE’s poor performance was on the back of poor operating fundamentals in the economy, as reflected by frighteningly high company closures, horrific retrenchment figures and the limited corporate access to affordable long term capital.
Mugabe, the only leader Zimbabweans have known since the country attained its independence from Britain in April 1980, is widely blamed for the country’s economic ills, after continuously implementing disastrous policies such as the chaotic land reforms of 16 years ago that decimated Zimbabwe’s economy by half and pushed the country from being a regional breadbasket to a basket case.
However, the increasingly frail nonagenarian blames targeted restrictions — notwithstanding overwhelming evidence to the contrary — that were imposed on him and a few Zanu PF apparatchiks by the West on account of his government’s poor human rights record.