New price struc­ture milks Zim busi­ness

The Star Early Edition - - INTERNATIONAL - Tawanda Karombo

ZIM­BAB­WEAN busi­nesses have started to in­sti­tute a mul­ti­tier pric­ing sys­tem, re­sult­ing in higher prices for pay­ments ef­fected through bank trans­fers and paid bond notes, while prices tagged for­eign cur­rency are much lower, ex­perts said.

But mar­ket-watch­ers in Zim­babwe have said there is grow­ing in­ter­est on the Zim­babwe Stock Ex­change (ZSE) from lo­cal fund man­agers that are run­ning away from money mar­kets.

Fi­nan­cial woes have height­ened dis­in­vest­ments from money mar­kets in Zim­babwe, traders and in­vest­ment an­a­lysts said.

“The money mar­ket is col­laps­ing and in­vestors are run­ning for cover fear­ing to­tal col­lapse from the fi­nan­cial and liq­uid­ity crises Zim­babwe is ex­pe­ri­enc­ing,” a mar­ket an­a­lyst at a fi­nance in­sti­tu­tion in Harare told Busi­ness Re­port yes­ter­day.

An­a­lysts at IH Se­cu­ri­ties said in a mar­ket re­port that in­ter­est on the ZSE has been firm.

“On the bourse, we con­tinue to see re­newed buy­ing in­ter­est from lo­cal funds seek­ing bet­ter re­turns com­pared to their money mar­ket in­vest­ments.”

Trade on the up

Trade deals on the ZSE have been firmer, pro­pelled by ris­ing trades and vol­umes in Delta Cor­po­ra­tion, Ton­gaat Hulett’s Hippo Val­ley and Econet Wire­less as well as Seedco. Turnover on the ZSE for the month of May rose 57.9 per­cent $17.58 mil­lion (R224.8m), with Econet, Seedco and Delta con­tribut­ing 33, 10 and 9 per­cent, re­spec­tively.

As a re­sult of Zim­babwe’s liq­uid­ity chal­lenges, the stock mar­ket was “get­ting rather over­val­ued as a re­sult of this bull run” and an­a­lysts ex­pect this to con­tinue, with no­table val­ues in blue chip coun­ters.

Al­though the stock mar­ket has been see­ing ris­ing trade val­ues, busi­nesses in Zim­babwe have been hit hard by higher pro­duc­tion costs as they have to pay a pre­mium to pro­cure for­eign cur­rency to pay for im­ported raw ma­te­ri­als.

In­fla­tion has also been mount­ing in Zim­babwe over the past few months, with the IMF also re­cently warn­ing Zim­babwe that ex­ces­sive state ex­pen­di­ture is fu­elling in­fla­tion. Zim­babwe spends more than 70 per­cent of its rev­enues on re­cur­ring state ex­pen­di­ture, de­priv­ing the econ­omy of in­fra­struc­ture de­vel­op­ment.

“The sus­tained de­mand for hard cash is an­tic­i­pated to be fu­elled by the use of a mul­ti­tier pric­ing sys­tem by re­tail­ers,” said the re­port.

The Re­serve Bank of Zim­babwe is al­lo­cat­ing for­eign cur­rency to busi­nesses us­ing a strict pri­or­ity list. For­eign share­hold­ers in Zim­bab­wean com­pa­nies have been caught up in this cri­sis with some un­able to get their div­i­dends.

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