HARARE - Investor sentiment on the Zimbabwe Stock Exchange (ZSE) has significantly improved since the takeover of power by the country’s military chiefs last week.
Analysts yesterday said the Old Mutual Implied rate, which measures the premium on the financial services giant’s shares, compared to those listed in London has improved.
“Investor expectations that developments since 14 November have materially improved the prospect of a change in leadership (in Zimbabwe) and an ultimate re-opening of foreign capital inflow have driven the Old Mutual Implied Rate from 475% to 375%.
This measures the premium in the Harare-listed shares over the London-listed ones which, in turn, is an indication of a premium priced into local equities to reflect shortages of cash in the local economy,” Hasnain Malik, an analyst at Exotix Capital said on Monday.
The industrial index was down a massive 20 percent since the Zimbabwe Defence Force confined President Robert Mugabe to his private home in Harare’s Borrowdale last Wednesday.
“Counter-intuitively, falling local share prices are, until OMIR approaches zero percent, a reflection of increasing macroeconomic optimism. In other words, if a foreign equity investor purchased the Old Mutual London line, converted to the Harare line, sold, and purchased one these locally listed equities, these are the valuation multiples on entry (ignoring transaction costs which may be, of course, significant),” added Malik.
Investors were however still worried that “ultimate liquidation and repatriation at par remains, in practical if not regulatory terms, nearly impossible” although “the allocation of fresh capital in this manner would only be made in the expectation of an improvement in repatriation” conditions.
The ruling Zanu PF party had called for a special caucus on Monday and it is expected that an impeachment process may be on the cards.
Other experts said Monday that Emmerson Mnangagwa, the former Vice President of Zimbabwe who was fired by Mugabe to spark the current wave of unrest, leaned more “towards courting foreign capital”.
Former Finance Minister Chinamasa, seen as close to Mnangagwa and likely to get the influential treasury department back in the post-Mugabe administration, is also seen as preferring a softer stance on indigenisation policies which would require foreign firms to give away majority shares into the hands of black Zimbabwean groups.
“There’s no one size fits all (to indigenisation),” Chinamasa said in 2014. He added: “We have never said that if you bring your money we will have 51% of your money.”