Foreigners sell off local equities as currency volatility rages

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  • Foreign sells increased to $104 million
  • Foreign purchases came off at $50 million

Foreign participation on the Zimbabwe Stock Exchange continues to plummet in February as investors continue losing hope owing to the weak economic fundamentals prevalent in the country.

Foreign investor participation remains subdued owing to government’s failure to enforce mechanisms for the repatriation of funds outside the country.

Foreign investors have been struggling to repatriate their proceeds resulting in the loss of appetite to inject money onto the local bourse.

This comes at a time when the local investors are actually seeking a safe haven on the bourse hedging against inflation, promoting turnover growth on the market.

Foreigners were net sellers in the month selling shares valued $104 million, the highest since February 2019.

According to Equity Axis analysts, “this is a worrying statistic as it shows a deepening exit of foreign capital from the stock market.”

Foreign sells worsened by 18% to $104 million during the period under review from $88 million recorded in January.

According to data from ZSE, foreign purchases came in at $50 million, a 150% growth from $20 million registered in the previous month. The growth was however not sufficient to cover for the huge gap of $104 million.

Foreign investors’ participation for the greater part of 2019 was on the low end with foreign buys closing the year at US$25 million, the lowest in 10 years while recording the lowest contribution to total turnover in 11 years (at 13%) as foreign investors chose to continue sitting on the fence.

Foreigners have generally opted to exit the local market mainly via Old Mutual, a fungible stock hence the stock’s unparalleled surge in recent periods.

Equity Axis commented that the trend showing flight of foreign capital is likely to prevail into the foreseeable future as investors see escalated risks on Zimbabwe’s landscape.

Equity Axis News

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