Foreign buyers dumping Zimbabwe shares in droves

MMC Capital said according to their valuation metrics, the local bourse is currently overvalued and also prime for a reversal, but the growing premium between the greenback and the RTGs defies the odds.

“Despite the overvaluation picture that is being postulated by the RSI and the P/E valuation metric, the growing premium between the USD notes and RTGs premium points to a persistent rise in equity prices,” MMC Capital said.

In the year to date, both the industrial index and the mining index advanced 42.05 percent and 24.99 percent to 205.3  points and 73.13 points respectively.

The central bank is establishing a Zimbabwe Portfolio Investment Fund to the tune of $5 million, to facilitate the efficient repatriation of portfolio related funds to foreign investors invested specifically on the Zimbabwe Stock Exchange (ZSE).

In his mid-term monetary policy last Wednesday, Reserve Bank of Zimbabwe (RBZ) governor John Mangudya said the central bank is very concerned over delays in repatriation of foreign exchange for securities related transactions processed by banks, despite such transactions being on the first category of the priority list for the allocation of foreign exchange.

As at June the country had a backlog of $75 million in dividends and proceeds from sales that are owed to foreign investors.

“The Bank shall place an initial seed capital of $5 million in this Fund to kick-start the repatriation mechanism and improve investor confidence,” Mangudya said.

The fund will focus on the collection and repatriation of foreign funds related to portfolio equity purchases and sales, with the scope of the fund to include the repatriation of dividends at a later date, Mangudya said.

The fund shall be put in place with effect from September 1, with the central bank having an oversight role for monitoring purposes and maintaining integrity and transparency in the functioning of the fund.

Two commercial banks shall be used to ensure that all incoming and outgoing portfolio funds, shall be  collected and pooled into the fund, with payments made on a first-in-first-out basis and, if required, on a pro rata basis in line with funds available in the fund post contribution. Excess funds raised will be allocated to clear the backlog with capital gains prioritised over dividends.-The Source

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