In­vestors pull out of a cash strapped Zim

The Star Early Edition - - BUSINESS NEWS - Tawanda Karombo

FOR­EIGN eq­uity hold­ers are dis­pos­ing of their in­vest­ments on the Zim­babwe Stock Ex­change – sell­ing off $61 mil­lion (R823m) so far this year in shares com­pared to for­eign pur­chases of $33.5m.

Listed com­pa­nies have been un­able to pay div­i­dends to for­eign share­hold­ers over the past two years as a re­sult of a cash crunch, but cen­tral bank gover­nor John Man­gudya last week an­nounced that the gov­ern­ment would set up a port­fo­lio fund to en­able pay­ments.

MMC Cap­i­tal an­a­lysts said in a note that “the dif­fi­culty in re­mit­ting sale pro­ceeds, driven by Nostro pres­sures, re­sulted in some for­eign in­vestors opt­ing to sell and re­serve bet­ter po­si­tions” in the re­mit­ting queue.

“The trend is wor­ry­ing, given that at­tract­ing for­eign cap­i­tal in­flows has an over­all pos­i­tive im­pact on eco­nomic growth,” MMC said. “The surge in eq­ui­ties has largely been driven by lo­cal in­sti­tu­tional in­vestors seek­ing a real growth com­po­nent that is pro­vided by eq­ui­ties.” Fund man­agers such as Old Mu­tual say for­eign in­vestors have changed strat­egy from mon­e­tary as­sets as they seek shel­ter from the pro­longed liq­uid­ity cri­sis.

Traders said that for­eign share­hold­ers were still keen to in­vest in coun­ters such as Hippo Val­ley, Delta Cor­po­ra­tion, Econet Wire­less and seed pro­ducer Seedco, among oth­ers.

BAT Zim­babwe and Delta Cor­po­ra­tion, the lo­cal unit of AB InBev are also among the com­pa­nies that have been un­able to pay div­i­dends to for­eign share­hold­ers on time. Econet Wire­less also had to carry out an off­shore rights is­sue to set­tle ma­tur­ing in­ter­na­tional debts as Zim­bab­wean com­pa­nies fail to pay cred­i­tors and de­fault on loans. “For­eign in­vestors will ob­vi­ously sell off at the lat­est sign of trou­ble in get­ting their funds from Zim­babwe, but right now it has been tricky to get money out of Zim­babwe,” said one trader. MMC Cap­i­tal said “given the min­i­mal in­vest­ment as­set classes on the lo­cal mar­ket, eq­ui­ties re­mained the bet­ter as­set class, given unattrac­tive re­turns in the other as­set classes” in Zim­babwe at the mo­ment. But the cen­tral bank said last week that a new port­fo­lio fund will change the sit­u­a­tion for the bet­ter.

PHOTO: BLOOMBERG

The Zim­babwe Stock Ex­change in Harare. For­eign in­vestors have been sell­ing off as many com­pa­nies have been un­able to pay div­i­dends to for­eign share­hold­ers on time.

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