If you recall, it was earlier this month when the Zimbabwe Stock Exchange (ZSE) hit $15 billion in market capitalisation for the first time. It was no cause for celebration however as that performance was attributable to panic buying of shares which in turn led to overvaluation of the counters.
Analysts warned that there would be self correction and that started when the military takeover started. In the 5 days to Tuesday 21 November the ZSE dropped over $5 billion.
The military takeover was generally viewed as positive but this did not stop share prices from tanking. Analysts say this is because the unprecedented share price we experienced before the military takeover were based on bad news and so the perceived change coming was bound to reverse the trend.
In the bull run before the military takeover it was the locals responsible for the uptake because in that time foreigners were disposing of their shares. It was apparent that local Zimbabweans saddled with a cash crisis and a deteriorating economy were desperate to preserve the value of their monetary assets and flocked to the stock exchange.
When the military took over, locals started disposing of their shares and foreigners accelerated their rate of disposal of shares on the ZSE. From Wednesday the 15th of November to the 18th of the same month, foreigners had a net sale of $8.3 million.
On Tuesday however it was becoming clearer what the outcome of the military intervention would be, which was that Robert Mugabe would be leaving his post as president of the country, which is what happened later in that day.
On that day, our Freedom Day, the same foreigners who were selling off their stakes on the ZSE were actually net buyers. They disposed of shares worth $717,183 compared to buys worth $1,65 million. Granted those are not large figures but the fact remains that just a few days earlier they were net selling $8.3m.
Could this mean renewed confidence by the international community? It’s too early to tell but it is a good sign. If you followed the news following Robert Mugabe’s resignation, the international community seems ready to engage Zimbabwe yet again with the British PM going so far as to call Britain Zimbabwe’s oldest friend.
Of course some are still cautious as they do not know what the incoming president’s reign will look like. That we know it is Mnangagwa removes some of the uncertainty.
There is optimism all around and the hope is that policies which attract foreign direct investment will be put in place in this new Zimbabwe we are entering.
The Zimbabwe Stock Exchange is the country's local bourse which has over sixty trading companies listed. The stock company is based in the capital city Harare and has evolved through various stages in its evolution. Read More About Zimbabwe Stock Exchange
Robert Mugabe is the former President of Zimbabwe. He was the President of the Republic of Zimbabwe from 1987 to November 2017. Prior to this, he was the Prime Minister of Zimbabwe since the attainment of independence in 1980. Mugabe resigned from his presidency on... Read More About Robert Mugabe
The Republic of Zimbabwe is a country located in the Southern Africa region. Its capital city is :Harare and the country has 10 provinces. Zimbabwe is 390,580 sq km and is bordered on all sides by other countries (Zambia in the north, South Africa in... Read More About Zimbabwe