Omega Ukama 
THE covid-19 pandemic will have a minimal impact on the Zimbabwe Stock Exchange (ZSE) which remains insulated from global financial developments, analysts say.
Over the past decade performance of the ZSE has proven to be directly tied to currency and monetary dynamics in the local economy with little regard to international trends. “While the knock effect of covid-19 on the global stock markets especially in Europe and America has remained well pronounced, I am of the view that the pass-through effect to the ZSE has been minimal, as our market has remained closed-off from the rest of world,” Mutandani Makuyana, Invictus Securities Zimbabwe’s head of research, told The Financial Gazette.
“Very limited fresh inflows, if any, have seen their way onto the local market. Instead foreign investors have been locked in, finding it difficult to exit the market due to exchange controls. “On the whole, we have observed massive business knock on the international front, especially the tourism sector including sports tourism and business in general. Taking cue from that, locally we are likely to have a knock in our tourism industry, which in turn will affect the few listed tourism counters, and perhaps export oriented counters. We expect the pass through effect through this channel to be weak, and remain not significant enough to neutralise the market driver factors which are speculative, inflation pressures and exchange rate depreciation,” he said.
Enock Rukarwa, a local equities and investment analyst echoed Makuyana’s sentiments saying the covid-19 would remain “an insignificant variable” on the local bourse due to the thin and dwindling foreign participation.
“The ZSE continues to be driven by macro-economic factors, firm specific factors and socio-political events. “Macroeconomic factors have been dominant in dictating the trend overtime hence inflation and exchange rate dynamics, while rallies linger to be triggered by socio-political events,” Rukwara said.
“The wiry depth of the stock market shields it from global shocks,” he added. While global markets have been recording their worst declines since the great recession of 1987, local stocks have remained relatively stable with minimal shocks in response to recent policy pronouncements. Over the past three weeks, President Emmerson Mnangagwa’s government has made sweeping changes to the country’s monetary system, which include the introduction of a ‘managed-float’ exchange rate and the suspension of the fungibility of stocks on the ZSE. Much recently government fixed the domestic currency at 1:25 to the US dollar and also lifted a ban on the use of the greenback in local transactions. The ZSE lost 9,06 points (1,94 percent) to close the week at 457,88 points.
