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ZSE bearish trading continues

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THE Zimbabwe Stock Exchange (ZSE) this week lost nearly $1 billion of its value as bearish trading continues following the announcement of the harmonised elections results.

Report by Business Reporter

Cumulatively, the ZSE main index lost 13,99 percentage points from Monday to yesterday as uncertainty continued to grip the markets.

On Monday, the industrial index plunged 11% to 205 points, the hardest knock since the adoption of multiple currencies in January 2009.

The bourse has since then been on a downward spiral.

The mining index, on the other hand, also retreated during the past four days, shedding 12,64 percentage points.

The plunge came a few months after the Economist Intelligence Unit, a global think-tank, warned that the ZSE bubble would, as the market is, be “vulnerable to a sharp correction” ahead of the elections.

In the run-up to the elections, the exchange rallied, at one stage breaching the $6 billion mark.

Market capitalisation, which was $3,96 billion at the start of the year, surpassed $6 billion in the last few weeks.

On Monday, ZSE chief executive officer Alban Chirume attributed the plunge to uncertainty which surrounded the outcome of the elections.

He, however, said the exchange was expected to rally once a new government was formed.

But analysts say investors continued to closely follow political developments after MDC-T leader Morgan Tsvangirai challenged the outcome of the polls he lost to incumbent President Robert Mugabe.

Tsvangirai has described the election outcome as null and void, adding that he would soon send a dossier exposing alleged vote-rigging to Sadc and the African Union.

Most countries in the regional bloc have since endorsed the outcome of last Wednesday’s polls.

Official figures show that foreign buyers are dominating, accounting for more than three-quarters of market turnover on the ZSE.

Institutional investors, who traditionally had been key drivers on the local bourse, have in recent years reduced their exposures to the equities market.

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