Investor sentiment favours army takeover in Zim
INVESTOR sentiment on the Zimbabwe Stock Exchange has significantly improved since the takeover of power by the country’s military chiefs last week.
Analysts yesterday said the Old Mutual Implied Rate (Omir), which measures the premium on the financial services giant’s shares, compared to those listed in London has improved. “Investor expecta- tions that developments since November 14 have materially improved the prospect of a change in leadership (in Zimbabwe) and an ultimate re-opening of foreign capital inflow have driven the Omir from 475 percent to 375 percent. 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 Cap- ital said yesterday.
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 yesterday and an impeachment process may be on the cards.
Other experts said yesterday 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 is also seen as preferring a softer stance on indigenisation policies.