Foreign investors dump Zimbabwean equities

Source: Foreign investors dump Zimbabwean equities – Sunday News June 5, 2016

Roberta Katunga Senior Business Reporter
FOREIGN investors have been dumping Zimbabwean equities at a record rate with more than $52 million worth of shares having been sold between January and May compared to $33 million bought. According to statistics from the Zimbabwe Stock Exchange, in January a total of 19 092 766 shares were bought while 38 501 218 were sold by foreign investors.

In February, 26 320 057 shares were bought and 81 774 890 were sold while in March and April 40 081 439 shares bought, 62 672 785 shares sold and 18 310 015 bought, 81 740 034 sold respectively. In May foreign investors bought 33 154 075 shares and sold 35 235 536. According to market researchers, this is the first time since dollarisation in 2009 that foreigners have sold more shares than they have bought.

Lynton Edwards research analyst Mr Kudzanai Sharara said: “Foreign investors have always been net buyers since 2009 but now they are net sellers as seen for the period January to May.”

He said the foreign investors were getting rid of their shares on the local bourse at a record rate at the back of increased risk in terms of currency in use adding that the poor performance of the economy was also a deterrent to investment.

“Most of the companies that investors are interested in like Delta Beverages and Econet posted unconvincing results and for someone who has been holding onto shares for a long time, they end up having investor fatigue resulting in the offloading of shares,” said Mr Sharara.

According to economists, the imminent introduction of bond notes was causing panic in the market with investors skeptical of the central bank’s intentions. Economist Mr John Robertson said the dumping of local shares was mainly a result of decline in confidence.He said recent policy statements have seen confidence levels falling very sharply in the last few weeks.

“The reports on the printing of bond notes might be misunderstood but perception is still damaging. If investors were confident in the future prosperity of the economy, they would be buying shares and not selling,” said Mr Robertson.