Thursday, January 8, 2009

Zimbabwe’s Stock Exchange Fails to Resume Trading (Update1)

By Brian Latham
Jan. 7 (Bloomberg) -- The stock exchange of Zimbabwe, which has the world’s highest inflation rate and has suffered a decade of recession, hasn’t reopened since the Christmas holidays after new regulations caused trade to grind to a halt.
“We don’t know exactly when trading will resume because we are still investigating various issues,” Emmanuel Munyukwi, chief executive officer of the Zimbabwe Stock Exchange, said by phone today from Harare, the capital. Munyukwi couldn’t provide further details because he’s still on vacation, he said.
Trade on the Zimbabwe Stock Exchange, established in 1896, stopped on Dec. 17. The halt came after the country’s Securities Commission on Nov. 20 ordered stockbrokers to submit audited financial reports of their net worth by the end of December 2008. The commission on Dec. 16 warned broking firms they would be closed if they failed to meet the deadline.
Inflation in Zimbabwe is estimated by the government at 231 million percent. Price increases have been fuelled by 10 years of economic recession that caused shortages of food, fuel and other basic commodities. Investors with cash in Zimbabwe prefer to buy shares to avoid their money losing value, helping some individual stocks on the Harare-based exchange to post increases of as much as 100,000 percent a day last year, according to Imara Holdings Ltd., a Gaborone-based brokerage.
While the Zimbabwe dollar trades at 98 million against the U.S. dollar on the inter-bank market, on the black market, where most residents buy their foreign exchange, it changes hands at 100 billion to one.
Kingdom Stockbrokers, a Harare-based broking firm, said trade hadn’t resumed on Jan. 5 as a result of central bank measures announced on Nov. 17.
‘Hands Full’
“Trades on the bourse are supposed to be backed by a letter of confirmation from bank CEOs, something which will prove difficult to implement as CEOs would argue that their hands are already full at the moment,” Kingdom said in an e- mailed statement today.
Reserve Bank of Zimbabwe Governor Gideon Gono in November accused banks in the southern African country of using fraudulent checks to artificially inflate share prices.
Companies whose shares trade on the Zimbabwe bourse include Old Mutual Ltd., a unit of U.K. insurer Old Mutual Plc, Econet Wireless Holdings Ltd., Zimbabwe’s biggest mobile-phone provider, and Kingdom Meikles Africa Ltd., which has interests in the leisure, banking and retail industries.
The exchange has 56 listed companies, according to Mbendi Information Servieces.
To contact the reporter on this story: Brian Latham via Johannesburg at Last Updated: January 7, 2009 06:50 EST

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