Markets unfazed by disputed poll results

MARKETS in Zimbabwe were unfazed by presidential results announced last week on Thursday in which President-elect Emmerson Mnangagwa won 50,8 percent of the votes to 44,3 percent for opposition leader Nelson Chamisa.
The Zimbabwe Stock Exchange (ZSE), which was subdued during the election week, recorded gains after results were announced.
The all share index registered a 0,1 percentage point gain on Friday’s trading session to settle at 114,19 points.
The index had shed 0,24 points the previous day and was flat at 114,08 points on August 1 as investors traded cautiously awaiting the election results.
According to the ZSE, the 2013 post-election period saw the local bourse suffer a two-week financial bloodbath, losing a cumulative 22 percentage points from 232,87 points on August 1, 2013 to 190,44 points on August 15, 2013.
This is, however, different this time around. Friday’s gains signalled positive sentiment in the economy due to business optimism brought about by the political certainty contrary to the 2013 post-election period.
On Monday, the all share index retreated 0,63 points (0,55 percent) to settle at 113,56 points as the market adjusted to election results. On Tuesday, the All Share index came off a further 0,26 points (0,23 percent) to close at 113,30 points.
The business community said it expected to work with the new government to revive the economy, which had hurtled back towards recession since July 2013.
The value of bond notes slightly appreciated on the parallel market on hopes of economic recovery after the election results.
Last Friday, a transfer using Real Time Gross Settlement (RTGS) was attracting a 65 percent premium for US$100 from about 70 percent during the same period last week. For hard cash the range was between 25 percent and 30 percent from 35 percent.
The rates have remained stagnant with the move being attributed to speculators who are awaiting to see the direction the markets take following policy pronouncements by the new government. They are also watching for clues on a possible Cabinet line-up.
This is contrary to November 15, 2017 when RTGS appreciated against the US dollar and the stock market literary “crashed” as economic players cheered the departure of former president Robert Mugabe.
Zimbabwe National Chamber of Commerce chief executive Chris Mugaga told The Financial Gazette that business was looking forward to working with the new government.
“As business we are now more focused on working with the new government for development, since we are open for business. We do not think anything is reversible here. We cannot afford to stay in election mode. We have lost a lot of ground, and need to work with what President Mnangagwa promised,” Mugaga said.
There was no significant move in the value of transactions processed through the National Payments System, which stood at close to $3 billion last Friday, a figure maintained since the first week of July. RTGS transactions account for about $2 billion, according to the Reserve Bank of Zimbabwe.
Average deposit rates for all classes of deposits remained unchanged from July 31 to August 6. Savings deposits have remained at 4,35 percent, one month deposits at 3,53 percent and three months deposits at four percent.
Commercial bank weighted lending rates for individual clients increased by 0,41 percentage points to 9,78 percent during the week ending August 3, up from a weekly average of 9,37 percent registered in the previous week. Lending rates for corporate clients, however, decreased to 7,02 percent, down from 7,07 percent registered during the previous week.
Local equities analyst Ranganayi Makwata said politics was a major determinant to stock market performance because politicians make policies affecting the economy.
He said an undisputed election would bode well for economic growth as it brings stability and certainty which are key to attracting investment into the country.
“This country desperately needs foreign direct investment to revive struggling businesses and to also introduce totally new ventures anchored on cutting edge technology to produce products and services which can compete internationally,” said Makwata.
“Such a scenario will broaden the scope and the depth of the stock market as current businesses will grow bigger. Some of the larger firms within the mining sector, for instance, could consider listing while a number of the newly established companies could go public as a way to raise capital,” he said.
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