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Traders have abandoned the Zimbabwe stock market as a blockade imposed to curb the spread of the coronavirus adds to tensions in an economy that was already dealing with severe drought, hyperinflation and a shortage of foreign exchange.
The volume of shares that changed hands on the stock market has plummeted by 55% since the government imposed strict measures to limit movement on March 30, said Justin Bgoni, executive director of the Zimbabwe Stock Exchange. Foreign participation has decreased to just 10% of all activity, from 34% last year.
“Both the Covid-19 outbreak and subsequent crash have put our publicly listed companies to the test, and some have to suspend operations, which has an effect on performance,” Bgoni said in an email response. to the questions.
The drop in trade suggests that the exchange is losing its safe haven for local investors, who in recent years have turned to stocks as a way to protect their savings from the ravages of inflation, which soared to 676% in March. The exchange’s market capitalization in local currency terms has doubled since November, but a drop in the Zimbabwe dollar means that dollar share values have fallen to their lowest level in a decade.
Covid-19 and the measures to counter it are just the latest setbacks. In March, Bgoni lamented the government’s decision to restrict trading of three key double-traded stocks, meaning they are no longer expendable or are deemed to have the same value as their listings on other exchanges.
“The suspension of fungibility has decreased the attractiveness of our market to potential issuers in other markets and, consequently, slows us down in terms of regional initiatives,” he said.
