Zimbabwe takes the top spot among the six sub-Saharan African (SSA) stock markets which had a year-to-date US dollar returns above 20% as at 31 December 2021, latest report shows.
As for Zimbabwe, market watchers believe that there is an actual lack of investment options due to currency issues. This comes as there are few Zimbabwean dollar assets and exchange rate movements are forcing investors to dispose of their money quickly or put it on the local bourse as a way to hedge against inflation.
“I think in the last few years the driving factors have been hedging against inflation and the low cost of local currency borrowings,” said Economist Yona Banda.
While experts assert that the Zimbabwean dollar “lacks the oomph,” authorities have been unflinching on their position about the local currency; it is “here to stay.” Yet, in spite of adopting this uncompromising stance, Zimbabweans are presently buying and stocking the U. dollars which they see as a stable store of value.
At the time of writing, the Zimbabwean dollar was trading at ZWL200 to the US dollar on the black market. Previously the treasury chief said the government is implementing the necessary policy measures to ensure that inflation is back on the single digit desired path. This includes a review of the current foreign currency auction system, further tightening of monetary policy and curbing malpractices in the financial sector. Zimbabwe’s annual inflation was poised to end 2021 around 52% – 58%.
Coming back to the report findings, the southern African nation topped the list of US$ returns by 153.3%, followed by Zambia at 96.7%, Seychelles at 44.2% and Ghana at 38.3%. BRVM Côte d’Ivoire came in at 29.3% while Malawi completed the list with 27.7%.
“13 of the fourteen SSA ex South Africa stock markets have positive US$ returns year to date. In US$ terms SSA excluding South Africa markets were up 0.5% in December and up 10.2% year to date,” stated African Financials in its December 2021 Top 30 Equities Valuation Report.
Markets rising were Mauritius up 4.0%, the BRVM up 3.0% and Kenya up 1.0%. Markets falling were Nigeria down 1.2%, Ghana down 2.3% and Zimbabwe down 4.4%. The market capitalization of the Top 30 companies for December 2021 was US$111bn, up 1.7% in November.
On currencies, the report revealed that the South African Rand in December fell marginally by 0.4% against the US$ and regional currencies were stable. The Zambian Kwacha rose 6% and has appreciated 26% following the July elections – Harare