Omega Ukama 
FOREIGN sell-offs on the Zimbabwe Stock Exchange (ZSE) have intensified over the past four months reaching a record $3,8 billion in September, official data shows.
Itai Chirume, MMC Capital executive director
Due to Harare’s “chronic policy inconsistency,” investor flight has plagued the ZSE for almost half a decade now, but starting in June — when government introduced a currency auction system — there has been a dramatic upsurge in foreign sell-offs.
“Since the restoration of the interbank market, foreign currency liquidity has improved giving way for foreigners to exit the market,” Equity Axis, a local research firm said in a note last week.
This comes as foreigners had for years, encountered difficulties getting their funds out of the country due to foreign currency liquidity challenges.
“Selloffs have also been stimulated by heightened uncertainty in the economy. An unstable environment poses escalated risks to foreign investors, who have other alternatives with positive risk adjusted returns.
“It is likely that foreigners will remain net sellers as long as the economy remains in a tailspin. The allure of cheap assets is negated by escalated volatility, which makes it difficult to ascertain the turning point in Zimbabwe’s economic fortunes,” Equity Axis said.
The September figure includes the transfer of $3,4 billion worth of Bindura Nickel Corporation (BNC) shares between ASA Resources and Sotic International.
Still, the difference ($400 million) is at par with figures for June and August – the market was suspended in July.
Experts have also warned that the central bank’s recently introduced foreign currency auction system will be overstretched by foreign investors stampeding to exit the ZSE in the aftermath of its five-week-long closure, which ended on August 03.
Government closed the market under the pretext that speculative activity involving fungible stocks was driving inflation, which at the time had reached 700 percent.
Itai Chirume, the executive director of MMC Capital, recently told The Financial Gazette that there has been “a flurry of selling activity” on the ZSE since it reopened after the “unprecedented closure”, with foreign investors aggressively disposing of their equities.
He said the exodus could pile pressure on the Reserve Bank of Zimbabwe to allocate the scarce foreign currency to the divesting foreigners, thereby cutting injections to other sectors that would benefit had the government not rushed to close the ZSE.
“The effect of that closure was that we now had some form of dampened appetite for investment on the market particularly by foreign investors,” Chirume said during a recent Fingaz Executive Dialogue. newsdesk@fingaz.co.zw
