Written by Vusimuzi Bhebhe
Saturday, 25 September 2010 13:38
HARARE – Zimbabwe’s stock market continues to be a boon among foreign investors despite negative sentiment about the overall political and economic climate in the troubled southern African country.
Latest figures from the Zimbabwe Stock Exchange (ZSE) show that net inflows from foreigners more than quadrupled in the four months to August.
According to the ZSE, foreign investors pumped in US$27.2 million to buy shares on the local bourse in August, up from US$17.7 million the previous month and an insignificant US$6.6 million in May.
The renewed foreign investor interest surpasses the performance of the ZSE before the introduction of Zimbabwe’s controversial black economic empowerment regulations in February which saw the market slip by at least 300 percent in one month under a cloud of uncertainty.
The empowerment regulations, which compelled foreign-owned firms to cede controlling stake to indigenous Zimbabweans over the next five years, have since been toned down following concerns by business and the MDC-T led by Prime Minister Morgan Tsvangirai.
Jitters over the regulations saw the bourse raking in only about US$5 million between February and March compared to more than US$20 million a month previously.
Critics fear Mugabe wants to press ahead with transferring majority ownership of foreign-owned companies as part of a drive to reward party loyalists with thriving businesses.
“We have seen an improvement in foreign inflows over the past month or so as the foreigners take positions in anticipation of the day when the country’s fortunes improve,” an analyst with a Harare-based stockbroking firm told The Zimbabwean On Sunday last week.
The improvement in foreign investor sentiment comes against the backdrop of a recent report by Netherlands-based Amstel Securities which labelled the ZSE the worst performing bourse in the sub-Saharan Africa.
Amstel said the Zimbabwean bourse declined by 7.5 percent between January and July compared robust performances by other African markets such as Kenya and Uganda which grew by more than 40 percent over the same period.
Concerns over Zimbabwe’s fragile coalition government have also lurked over the country’s economic horizon.
Constant bickering about the parties in the coalition regime has failed to restore confidence in an economy pummelled by a 10-year political crisis.