Zimbabweans seek safe haven in equities ahead of the introduction of bond notes

Local investors have flooded the Zimbabwe Stock Exchange over the past two weeks, seeking a safe haven in equities ahead of the introduction of bond notes early next month.

The introduction of bond notes, a token currency which will circulate within a basket of multiple currencies and at par with the United States dollar, has been pushed to the first week of November from end of October, with $75 million worth of the notes expected to be in issue by the end of the year.

The government has resorted to printing the notes in a bid to ease the shortage of US dollar notes in the economy, which it blames on smuggling of the reserve currency as well as a gaping current account.

The move has, however, spooked a banking public traumatised by a currency crisis that saw Zimbabwe print a $100 trillion note as hyperinflation galloped to 500 billion percent in 2008.

During the rush, market turnover has come in at $9.897 million, which is 73 percent of the exchange’s average turnover in the nine months to September.

Uncharacteristic of the usually sluggish exchange, the industrial index has breached and remained above the 100 point mark gaining 17 percent from 98.96 points as at 30 September 2016 to 115.81 points yesterday.

The mining index is also 14.88 percent firmer to 30.57 points over the same period.

Market capitalisation also rose to $3.188 billion compared to an average of $2.76 billion over the preceding nine-month period.

Continued next page

(248 VIEWS)