However, analysts cautioned against too much reliance on the implied rate because of the ongoing bull run on the ZSE, saying there is high demand for Old Mutual’s quality shares against low supply, which, based on market fundamentals, would lead to a higher price. This is also because the company’s financial performance is impressive relative to other counters that are listed on the local bourse.
Old Mutual’s high share price also reflects the underlying macro-economic woes besetting the economy at large, they add.
“Of course the implied rate has its own weaknesses since the stock market rally has gone out of control, with no proper fundamentals being observed,” an analyst said.
Foreign investors, on the other hand, are reluctant to take advantage of the arbitrage opportunity presented by the huge premium owing to delays in getting their proceeds as the country struggles to make foreign payments due to low nostro account balances.
Amid Zimbabwe’s worsening banknote shortage, the US dollar itself has two different values — physical dollars are trading at a premium of up to 50 percent on electronic transfers.
Physical bond notes on the other hand, attract a premium of up to 35 percent on mobile or electronic transfers.
With the central bank intent on injecting more bond notes into circulation, fears of runaway inflation are real.
Zimbabwe has recorded the first, and to date only, episode of hyperinflation in the 21st century and could record the second too, in the same generation. – The Source
(682 VIEWS)
This post was last modified on September 26, 2017 6:05 am
Zimbabwe, whose currency declined 80% this year before being abandoned, is now worried about its…
Zimbabwe’s new currency, the Zimbabwe Gold (ZiG,) continued to firm against the United States dollar…
United States Secretary of State Antony Blinken has congratulated Zimbabwe on its 44th independence anniversary…
The 813 billionaires in the United States have a total wealth of US$5.7 trillion. If…
President Emmerson Mnangagwa’s spokesman George Charamba says there is nothing to celebrate about the United…
Over drinks back in 2019, two British tycoons, Algy Cluff and Michael Spencer, agreed to…