Oct. 8 (Bloomberg) -- Zimbabwe’s benchmark stocks index rose for a 16th day, its longest winning streak in a year, as investors speculated President Robert Mugabe’s government will put in place policies supportive of economic growth.
The 73-member Zimbabwe Industrial Index rose 0.2 percent to 210.23 today, extending gains since Sept. 17 to 12 percent. Pelhams Ltd., a furniture credit-retailer, is leading the advance on the gauge with a 50 percent increase since the rally started. Econet Wireless Zimbabwe Ltd., a mobile-phone operator, has jumped 20 percent.
The gauge slumped to an eight-month low on Sept. 5, falling 24 percent after reaching its highest level in more than four years on Aug. 1. Mugabe, 89, won elections in July to extend his 33-year rule with threats to seize control of mines and banks from foreign and white investors and give them to black citizens and the government. Zimbabwe will stick with an International Monetary Fund program started in June that may help the country clear debts and restore the economy, Reuters reported Oct. 6, citing Finance Minister Patrick Chinamasa.
“The signs have been reasonably positive,” Brian Mugabe, an analyst at Imara SP Reid (Pty) Ltd., said by phone from Johannesburg yesterday. “The government has put measures in place that would take the country forward. It also said it will keep on engaging with industry on harmonizing of the indigenization program for what is best to industry.”
Zimbabwe’s economy will expand 5 percent in 2013 and 5.7 percent in 2014, according to the IMF. The southern African nation holds the world’s second-biggest platinum and chrome reserves after South Africa, as well as diamond, gold, iron ore and coal deposits.
Foreign demand for equities is strong and a primary driver of the rally, Mike Barnes, the Johannesburg-based managing director of Securities Africa, a brokerage, said in an e-mailed response to questions. After the post-election sell-off, many stocks became attractive to both local and foreign investors, he said.
The industrial index’s 14-day relative strength index rose to 80 today, the fifth day it traded above the level of 70 that indicates to some technical traders a measure is overbought.
There is “no sign that the rally will stop as demand remains strong across most stocks,” Barnes said. “It is perhaps a wasted opportunity.”
Zimbabwe emerged from almost a decade of recession when the government in 2009 permitted the use of the U.S. dollar and other currencies including the South African rand, after the local currency’s devaluation drove inflation to what the IMF estimated was 500 billion percent. Agriculture was decimated in the one-time grain exporter after the violent seizure of white-owned commercial farms began in 2000. Inflation may average 4.5 percent this year, according to the IMF.
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