World sells, but buying fever grips Zimbabwe Stock Exchange – Imara

Buying fever continues to grip the Zimbabwe Stock Exchange (ZSE) despite the global equity sell-off.

The contrast has been spotlighted by the Botswana-registered Imara financial services group in its latest monthly reports to international investors with a stake in the Zimbabwean economy and other markets across the continent.

The apparently perverse market behaviour is explained by hyperinflation and the increasing ‘dollarization’ of the Zimbabwean economy, with the exception of its domestic financial markets and the public sector.

John Legat, head of Imara Asset Management, reports: “In local currency terms, the ZSE has been going ballistic in line with hyperinflation and money creation. The ZSE was up 56 436% in October.”

Among other activities, Imara manages and markets a range of investment funds with equity holdings in various African jurisdictions, including Zimbabwe. It therefore monitors and researches equity performance in numerous sub-Saharan countries.

Harare-based Legat adds: “Daily moves of over 200% on the ZSE index are now normal. On some days, individual stocks have risen by 100 000%!

“Fundamentals on individual stocks have largely been ignored as individuals and institutions are investing in the stock market regardless of risk as it is one of the few places left where Zimbabwe dollars are accepted as currency.

“Rather than have Zimbabwe cash balances in a bank wasting away, investors are instructing their stock-brokers to buy anything liquid.”