Zimbabwe Stock Exchange Plunges 11% After Mugabe Victory
Zimbabwe’s main stock index plunged 11 percent, its biggest one-day decline since 2009, after President Robert Mugabe won a presidential election to extend his 33 years in power and his main rival refused to accept the result.
The benchmark Zimbabwe Stock Exchange Industrial Index fell to 205.6 points from 231.21 by the close of trade in Harare, the capital, paring its rise this year to 35 percent.
Mugabe, 89, won 61 percent of the presidential vote in results released by the Zimbabwe Electoral Commission on Aug. 3 while his Zimbabwe African National Union-Patriotic Front won a two thirds majority in parliament. Mugabe’s party, accused by the rival Movement for Democratic Change of rigging the election, is pushing policies including a law that compels foreign-owned companies to cede 51 percent of their assets to black Zimbabweans or the government.
“It’s the post election panic,” Carla Simleit, an analyst at Harare-based IH Securities said in an interview. “It’s reflective of the uncertainty thats around the elections.”
Delta Corp. the biggest Zimbabwean company by market value, fell 20 percent to $1.20, giving it a market value of $1.48 billion. The brewing company is 21 percent owned by SABMiller Plc (SAB), according to data compiled by Bloomberg.
Edgars Stores Zimbabwe Ltd., the local unit of a South African clothing retailer, fell 29 percent while Truworths Zimbabwe Ltd., another local unit of a South African clothing seller, fell 17 percent. The local unit of Barclays Plc fell 15 percent. Only two stocks on the 73-member index gained. It was the biggest decline since Nov. 2, 2009.
The mining stocks index fell 2 percent.
Most banks in Zimbabwe have stopped making new loans because of concern about economic policy under the new government, two chief executive officers of lenders said, declining to be identified because they didn’t want to anger the government.
“People are watching Zimbabwe with their finger on the trigger,” said Francois Conradie, an analyst at NKC Independent Economists in Paarl, near Cape Town, said by phone. “The business environment is completely unpredictable. The government that is coming isn’t embarrassed with their indigenization drive.”
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