Business / Companies
Mugabe's poll victory rattles foreign investors
21 Aug 2013 at 20:28hrs | Views
The re-election on President Robert Mugabe in Zimbabwe appears to have unsettled foreign investors who have since embarked on selling off listed stocks.
Since President Mugabe's re-election on the July 31, foreigners have sold off shares worth above $72.8m.
In turn they have only bought shares worth $19.4m.
The Zimbabwe Stock Exchange (ZSE) has been on a downward spiral since Mugabe's election victory. It has been dropping from highs of 233.18 points achieved on August 1 to 182.75 points as of Wednesday, a decline of 21%.
The overall market capitalisation for the ZSE has also come off from $5.98b on the 30th of July to $4.69b today.
Banking sector
The banking sector was not spared either amid reports that the sector lost more than $800m in panic withdrawals in the week of the elections.
Early this month, Zimbabwe's Reserve Bank governor Gideon Gono was forced to issue a statement to try and calm depositors that their deposits would be safe.
Addressing the business community in Bulawayo, he said cash shortages experienced after the announcement of the election results were due to panic withdrawals by people who feared the immediate return of the Zimbabwean dollar after Zanu-PF's victory.
"Access to loans is a function of deposits in a bank and if you are taking away deposits from the bank it means the bank will have nothing," he said.
"This is what has happened in the banking sector in the past few days, given the extent people have withdrawn their deposits panicking that their money will be locked in banks as the new Government will revert to the local currency."
Since President Mugabe's re-election on the July 31, foreigners have sold off shares worth above $72.8m.
In turn they have only bought shares worth $19.4m.
The Zimbabwe Stock Exchange (ZSE) has been on a downward spiral since Mugabe's election victory. It has been dropping from highs of 233.18 points achieved on August 1 to 182.75 points as of Wednesday, a decline of 21%.
The overall market capitalisation for the ZSE has also come off from $5.98b on the 30th of July to $4.69b today.
The banking sector was not spared either amid reports that the sector lost more than $800m in panic withdrawals in the week of the elections.
Early this month, Zimbabwe's Reserve Bank governor Gideon Gono was forced to issue a statement to try and calm depositors that their deposits would be safe.
Addressing the business community in Bulawayo, he said cash shortages experienced after the announcement of the election results were due to panic withdrawals by people who feared the immediate return of the Zimbabwean dollar after Zanu-PF's victory.
"Access to loans is a function of deposits in a bank and if you are taking away deposits from the bank it means the bank will have nothing," he said.
"This is what has happened in the banking sector in the past few days, given the extent people have withdrawn their deposits panicking that their money will be locked in banks as the new Government will revert to the local currency."
Source - fin24
