Zimbabwe’s benchmark stock index has slid by 21% since the government allowed trading to resume just over two weeks ago, with traders attributing the slump to foreign investors cutting their holdings.
The Zimbabwe Industrial Index had surged almost 700% in 2020 before trading was halted on June 26 by authorities who blamed dealing in stocks for contributing to a plunge in the local currency.
The government said shares of Old Mutual Ltd., PPC Ltd. and Seedco Ltd., which have listings outside the country, were being used to manipulate foreign-exchange rates. They remain suspended.
The slump since the Harare exchange’s Aug. 3 resumption is “driven particularly by foreign selling post the market suspension,” said Lloyd Mlotshwa, head of equities at Harare-based IH Securities, coupled with low liquidity.
“There’s very little currency locally to absorb the stocks, so prices inevitably get hammered.”
Foreigners have sold Z$208 million ($2.5 million) worth of stocks since the bourse reopened, according to data provided Tuesday by the Zimbabwe Stock Exchange.