Foreigners ditch Zimbabwe equities over bond notes

Foreign participation on the Zimbabwe Stock Exchange recorded a net outflow of $56.28 million in the 10-month period to October 31 this year, compared to $306 000 over the same period last year.

In 2012 with Zimbabwe’s post-dollarisation recovery at its zenith — a growth of 10.6 percent — the ZSE recorded net inflows of $51.983 million. In 2013 and 2014, it generated net inflows of $82.962 million and $93.201 million over the 10 months.

Analysts say the poor creditworthiness of the government — which ran a budget deficit of about $400 million last year and is expected to be over $1 billion this year — has also influenced foreign buyers’ investment decisions.

Chinamasa had predicted a budget deficit of $150 million in the 2016 budget. As of June, this year, the deficit was at $623 million.

In his mid-term, fiscal policy announced in September, Finance Minister Patrick Chinamasa noted that, “there is a growing trend whereby international correspondent banks and other financial institutions terminate financial relations with financial institutions in the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) member states, including Zimbabwe.”

The process, commonly referred to as de-risking, has hit hard trade transactions and portfolio investments which largely rely on correspondent banking relationships.-The Source

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