Johannesburg - For all the current political and economic chaos in Zimbabwe, foreign investors are testing the potential of its stock market.
The Zimbabwe stock exchange and the value of Zimbabwean companies traded on the JSE soared when it appeared Zimbabwean President Robert Mugabe had lost March 29 elections. But the boom went bust quickly as it became clear Mugabe would try to hold onto power, whatever the results of the election, which have yet to be released.
Alka Banerjee, New York-based global equities vice president for Standard & Poor's, said the stock surge, however brief, shows how closely investors are watching Zimbabwe, waiting for the right time to move in.
"Firstly, Africa is hot, everyone wants to invest in Africa because there's a commodities boom going on," she said.
Zimbabwe should have been riding high on that boom, with its platinum, nickel and other resources, Banerjee said. Less than a decade ago, she said, it was seen as a strong emerging market because of its natural resources, an agriculture sector driven by tobacco, and several strong banks and other companies.
Zimbabwe's key agriculture sector was devastated, bringing the rest of the economy with it, by a land reform campaign Mugabe launched in 2000 that saw the often violent seizure of farmland from whites. Mugabe claimed the program was to benefit poor blacks, but much of the land was handed over to his cronies.
Fuel, food and other goods are scarce. Zimbabwe has the world's highest inflation, officially 165 000%, though independent estimates put it closer to 290 000%.
Mugabe's response has been to print more money and keep his exchange rate artificially low.
Holding pattern
Some potential investors worry about being accused of supporting Mugabe's regime, said Barry Davies, chief executive officer of franchising with the South African property company Chas Everitt International. But Davies, a former Zimbabwean, said investors can help the country recover from Mugabe.
In the week after the elections, Everitt noted it was opening offices in Zimbabwe, saying "hopes are high for a peaceful regime change." Davies says he has heard in the last two weeks from dozens of potential investors interested in commercial agriculture as well as other real estate.
"I think it's inevitable there will be change," Everitt said, adding the decision about when to invest "depends on appetite for risk."
While some weigh when to go in, Johannes Gawaxab, managing director of African operations for Old Mutual, says his financial services group is in the best position: sitting on investments in financial services companies and real estate it has held in Zimbabwe for more than 100 years, waiting for a chance to expand.
"The economy has got good drivers," Gawaxab said. "We are currently in a holding pattern, just to see what the political future is."
- Sapa-AP