Zimbabwe virus lockdown ravages bourse as trading volumes crash

An election poster for Emmerson Mnangagwa. (Photographer: Waldo Swiegers/Bloomberg)
An election poster for Emmerson Mnangagwa. (Photographer: Waldo Swiegers/Bloomberg)

Traders have abandoned Zimbabwe’s stock market as a lockdown imposed to curb the spread of the coronavirus adds to the strains on an economy that was already contending with severe drought, hyperinflation and a shortage of foreign exchange.

The volume of shares changing hands on the bourse has plunged by 55% since the government imposed strict measures to limit movement on March 30, said Justin Bgoni, chief executive officer of the Zimbabwe Stock Exchange. Foreign participation has dwindled to just 10% of all activity, from 34% last year.

“Both the Covid-19 outbreak and the subsequent lockdown has put a strain on our listed companies, with some having to suspend operations, which has an effect on performance,” Bgoni said in an emailed response to questions.

The fall-off in trading suggests the exchange is losing its status as a haven for local investors, who have in recent years turned to stocks as a way of protecting their savings from the ravages of inflation, which soared to 676% in March. The bourse’s market capitalisation in local currency terms has doubled since November, but a crash in the Zimbabwe dollar means that stock values in dollar terms have plunged to their lowest in a decade.

Covid-19 and the measures to counter it are only the latest setbacks. In March, Bgoni bemoaned a government decision to restrict trading in three key dual-listed stocks, meaning they are no longer fungible, or regarded as being equal in value to their listings on other exchanges.

“The suspension of fungibility has dampened the attractiveness of our market for potential issuers from other markets and consequently sets us back in terms of regional initiatives,” he said.  

ZAR/USD
17.20
(-0.08)
ZAR/GBP
22.49
(-0.04)
ZAR/EUR
20.24
(-0.11)
ZAR/AUD
12.26
(-0.24)
ZAR/JPY
0.16
(+0.03)
Gold
1970.97
(-0.19)
Silver
24.17
(-0.15)
Platinum
918.00
(+0.08)
Brent Crude
43.86
(+1.45)
Palladium
2097.16
(+0.69)
All Share
56265.86
(+0.78)
Top 40
51978.06
(+0.79)
Financial 15
9884.60
(+0.81)
Industrial 25
75164.56
(+0.57)
Resource 10
57182.28
(+1.06)
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Do you think it was a good idea for the government to approach the IMF for a $4.3 billion loan to fight Covid-19?
Please select an option Oops! Something went wrong, please try again later.
Results
Yes. We need the money.
11% - 831 votes
It depends on how the funds are used.
74% - 5491 votes
No. We should have gotten the loan elsewhere.
15% - 1098 votes
Vote