Zimbabwe’s stock market hit a record high on Monday, propelled by local investors seeking a safe haven in an economy suffering acute shortages of foreign exchange.
The Zimbabwe Stock Exchange’s (ZSE) main industrial index touched 301.03 points, the highest since it was rebased in 2009 when Zimbabwe dumped its hyperinflation-hit currency in favour of the US dollar.
Market capitalisation reached $8.5 billion. It has more than doubled since January and added $1.77 billion in the past week.
Businesses and individuals struggling to access cash from banks have found the stock market a safe bet for maintaining the value of their money, analysts said.
ZSE data showed the industrial index has since January risen 108%, putting it among the world’s best performers. In the last week alone, the index is up 26%.
The rally is being driven by stocks such as brewer Delta Corporation, crocodile skin exporter Padenga and telecoms firm Econet Wireless. Shares in the firms have more than doubled in value this year.
“Stocks have become attractive as a store of value given the failing monetary system where your US dollars in the bank now have less value than the physical dollar,” said an equities analyst with a Harare stockbroking firm.
Cash has been the preferred mode of payment in Zimbabwe’s largely informal economy but shortages of money have seen the population struggling to adjust to card and mobile money payments, which the central bank is encouraging.
The surrogate bond note currency introduced last year has not eased cash shortages, while Us dollars have largely disappeared from banks.
Some businesses are buying the greenback at a premium on the black market to pay for imports.