Zim market dives on Mugabe re-election

Harare - The Zimbabwean stock market crumbled on Monday, a few days after the announcement that President Robert Mugabe had won last week's elections.

The results, which were rejected by the main political rival MDC-T, sent investors panicking amid fears that the new government would reintroduce the Zimbabwean dollar and intensify the empowerment drive.

The Zimbabwe Stock Exchange's main industrials index lost 11.09% to 205.57 points, while the total market capitalisation tumbled to $5.34bn from $5.97bn with most investors cancelling their buy orders.

Some of the stocks that lost ground were SABMiller-owned Delta down 20%, Econet down 14.71%, Tongaat Hulett-owned Hippo Valley down 4.76%, Edcon-owned Edgars down 28.57%, and Investec-owned OK Zimbabwe down 13.33%.

The major worry among most investors is the reintroduction of the Zimbabwe dollar. There is no clear timeframe as to when the local currency would be reintroduced.

Mugabe told a pre-election political gathering that a Zanu-PF government would not rush to reintroduce the Zimbabwean dollar if elected to power, as the party is mindful of avoiding a repeat of the hyperinflationary period experienced before the multiple currency system was adopted in 2009.

His statements dovetail with the Zanu-PF political manifesto.

The manifesto states on page 61: "At an appropriate time when the economy has reasonably recovered and stabilised and after full and transparent consultations with key stakeholders in the economy and financial sector, the next Zanu PF Government will work out the necessary fiscal and monetary modalities and timeframe for bringing back the Zimbabwe dollar to function along with the multicurrency system."

Also worrying is the controversial empowerment policy on which Zanu-PF aims to anchor the economy.

The party's political manifesto is anchored on the Indigenisation and Economic Empowerment Act, which seeks to enforce the transfer to local entities of at least 51% controlling equity in all existing foreign-owned businesses.

"Over and above this, the policy is to empower indigenous entities to hold 100% of equity to start up or take over strategic enterprises across the economy, especially in key sectors such as mining, tourism and agriculture," said the party.

- Fin24

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