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ZSE Capitalization Soars As Investors Seek Haven From Inflation

The Zimbabwe Stock Exchange (ZSE) gained ZWL$ 11 billion in just six trading days to breach the ZWL$ 75 billion mark as investors disposed their local currency into equities amid speculation of a cash injection into the economy in the region of ZWL$ 600 million, 263Chat Business has established.

There is growing speculation that the government has printed new ZWL$ 10 and ZWL$ 20 notes which many are already anticipating will drive inflation.

Inflation hit 676 percent in March and the figure could be higher for the months of April and May.

However following de-dollarization, most counters on the ZSE lost value in real dollar terms creating a much cheaper and safer haven to preserve value for investors.

The bourse has been on an ascending streak in recent weeks gaining 2.14 percent capitalization last week to close the week at ZWL$ 64.746 billion.

“There isn’t really anything significant to the economy because the rise in value of the ZSE is not based on growth in production output but mere speculatory tendencies and the rumor mill around the printing of new notes,” financial analyst, Victor Bhoroma said.

“What investors are basically doing is that they have realized that most of the counters are undervalued because of the currency depreciation. The assets have not appreciated with inflation level so it means most counters are lagging behind in terms of value. So if there is any growth in money supply most investors will turn to the stock exchange. The demand for shares increases market capitalization,” he added.

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On Thursday, all counters were in the positive with the primary indicator, ZSE All Share closing 5.67 percent up at 581 points.






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