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Foreign investors dump Zim equities at record rate

Jun 02 2016 14:12
Malcom Sharara

Harare - Foreign investors are dumping Zimbabwean-listed equities like never before. In a bid to minimise their losses, foreigners have sold $52.5m worth of listed shares since the beginning of the year, according to figures released by the Zimbabwe Stock Exchange on Thursday.

That is more than the $33.4m worth of shares foreigners have bought in the five months ended May 31 2016.

This is the first time since dollarisation in 2009 that foreigners have sold more shares than they have bought, becoming net sellers by shares worth $19.1m.

An analyst with a local advisory firm said the current scenario is part of a broader trend that gathered steam in the last two years, with foreigners being net buyers by very slim margins.

“If you look at the trend, you will see that in 2015 foreigners bought and sold shares worth $63.7m and $63.8m respectively so this has been long coming,” said Jeremy Negonde, a local analyst, adding that in 2014 the gap was a bit bigger with foreigners selling $98.6m worth of shares and buying $133.4m.
             
Another analyst, who requested anonymity, said the sell-off is a result of increased risk in the country where the “United States dollar appeal is not there any more, given the current monetary challenges.”

“So if there is still a window to remit funds, then they are taking it,” said the analyst.

Other analysts said the current sell-off is to be expected, given the continued economic decline with no prospects of a turnaround in sight.

“I think there is investor fatigue; we have all being waiting for an economic turnaround for far too long but it's not coming.

"I also think these foreign sales are fundamentally driven. The country’s economy doesn’t seem to be improving," said Negonde.

Zimbabwe has experienced the collapse of its agricultural sector and deindustrialisation, compounded by the ongoing cash and liquidity challenges which have put considerable strain on an already fragile economy.

zimbabwe  |  africa economy  |  equities
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