31 May 2014

Zimbabwe: Dollarization - 29 Firms Exit Stock Market

A TOTAL of 29 counters have stopped trading on the Zimbabwe Stock Exchange (ZSE) since the economy was formally dollarized in February 2009.

Speaking at the Confederation of Zimbabwe Industries (CZI) Annual General Meeting on Thursday, Reserve Bank of Zimbabwe division chief Simon Nyarota said activity on the local bourse were a reflection of the slowdown in the economy.

"Since 2009 a total of 14 counters were suspended and 15 counters were delisted from the stock exchange," he said in a paper called Zimbabwe at Crossroads.

Analyst say a number of quoted companies could delist this year as the wider macroeconomic environment remains dire, with the government's fiscal policy announced in December last year failing to lay out a strong foundation for economic recovery.

"The continued decline in both the industrial and mining indices signifies a slowdown in the economy," said Nyarota.

A total of 11 companies exited the ZSE last year due to liquidity challenges that resulted in businesses companies failing to raise money on the local bourse or attracting new investors to inject fresh cash.

A significant number of the delisted firms failed to meet the minimum listing requirements, an indication that the volatile climate that has dogged the ZSE since dollarisation.

Industrial counters Apex Corporation, Cairns Holdings, Celsys, Chemco Holdings, Interfresh, Gulliver, Interfin, Lifestyle Holdings, Phoenix Consolidated, Steelnet and financial services firm, Trust Holdings delisted last year.

During the first week of January, PG Industries was suspended from the local bourse for failing to meet ZSE requirements due to a difficult operating environment.

Nyarota said Zimbabwe had experience subdued FDI levels at US$400 million compared to other SADC with over $1 billion for neighbouring countries.

Average FDI for Zimbabwe for 2002 to 2012 is US$88 million, compared toUS$800 million for Zambia, US$586 million for Mozambique and US$486 million for Botswana.

ZSE this month said two companies would be listed on the local bourse during the second half of the year.

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