06-02-17 by Spotlight Zimbabwe

Zim bourse rallies as local investors turn to equities

Malcom Sharara

Harare – The main industrials index of the Zimbabwe Stock Exchange was up by 27.4% in May as investors continue to seek  refuge in real assets, amid a cash crisis that has seen funds remain trapped in the banking system.By the close of trade on Wednesday, the last day of trading in May, the main industrials index was up 0.71% to close at 162.34 points.

The equities rally in May reversed the market’s losses earlier in the year to close trading up a healthy 12.32% year-to-date.

Local investors have been buying into the equities market as a hedge against currency uncertainties and shortages.

Most cash-rich Zimbabwean companies and individuals have been failing to access their cash locked in banks due to foreign currency shortages.

Businesses, especially manufacturers and mines, have also been struggling to make foreign payments since the foreign currency shortages intensified at the beginning of 2016.

The Reserve Bank of Zimbabwe last year introduced a priority list that is meant to control the use of the scarce foreign currency.

This has resulted in delays in payments to foreign suppliers and foreign investors repatriating their capital gains from trading on the ZSE.

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