Source: Govt acts on ZSE investor apathy | The Herald December 9, 2016
GOVERNMENT will come up with measures to enhance the attractiveness of the Zimbabwe Stock Exchange next year after foreign investors deserted the bourse en masse this year.Presenting the 2017 National Budget Statement to Parliament in Harare yesterday Finance and Economic Development Minister Patrick Chinamasa said foreign purchases plunged 51 percent to $55 million in the 10 months to October from $111 million in the same period last year.
He said going forward; Government’s thrust will be on improving competitiveness of the ZSE to attract foreign investments, especially cognisant of the stiff competition from other African exchanges, also bidding to attract the investors.
Lukewarm interest from the cash rich foreign investors, at a time local investors are handicapped by a crippling liquidity crisis, resulted in overall revenue during period plunging.
“The Zimbabwe Stock Exchange (ZSE) continued to experience challenges during 2016, as investors exited the bourse against the background of cash and liquidity challenges, weak aggregate demand and reduced business confidence. The slump in stock market activity saw turnover for the 10 months to 31 October down to $144,46 million, 29 percent lower compared to the same period in 2015,” he said.
The ZSE listed entities have borne the brunt of investor apathy in a macro-economic environment suffering from lack of major fundamentals to drive positive sentiment; with sluggish economic growth this year forecast at a lowly 0,6 percent.
Reflecting this, industrial and mining indices remained on a downward trend for most of this year before experiencing substantial gains in early October, which resultantly translated to gains for both indices for the 10 months to October.
The industrial index gained 22 percent, while the mining index surged 27 percent in October, as investors switched portfolios from the money market ahead of introduction of bond notes.
Analysts said that some investors were overly concerned about the monetary implications of the surrogate currency. However, the bond notes have received overwhelming approval from the public; as a medium of exchange.