February 19, 2009 / 12:03 PM / in 9 years

Zimbabwe stock exchange restarts, trades in dollars

HARARE (Reuters) - Zimbabwe’s stock exchange restarted after a three-month halt on Thursday and trades were in U.S. dollars for the first time, a move the new government hopes will help attract investment and revive the economy.

<p>A broker makes a bid at the morning trading session of the Zimbabwe Stock Exchange in the capital Harare, April 3, 2008. REUTERS/Howard Burditt</p>

The ZSE, along with property, had been viewed by investors in Zimbabwe as one of the few relatively safe havens in an economy ravaged by the world’s highest inflation rate.

Trading stopped in November during a central bank crackdown on banks and stockbrokers accused of allowing traders to use fraudulent cheques to purchase shares.

The ZSE asked the government for permission to trade in foreign currency when it restarted given the collapse of the Zimbabwe dollar, a request the central bank approved earlier this month.

Trading got off to a slow start on Thursday with very few buyers. There was applause when shares in manufacturing firm Apex traded hands, making it the first successful foreign currency-denominated deal.

Long-time rivals President Robert Mugabe and MDC leader Morgan Tsvangirai last week formed a unity government after months of wrangling and have pledged to make reviving the economy a top priority.

Renaissance Capital said it favours Zimbabwean stocks.

“While the key risks remain, namely political risk and a still deteriorating macroeconomic environment, we believe valuations have fallen to more attractive levels,” it said in a research note.

Washington Mehlomakhulu, an equities analyst with Highveld Financial Services in Harare, said investors whose funds were tied up in stocks were likely to welcome the news, but that dollarisation of the market would present challenges.

“There might not be enough liquidity to fund transactions, especially from local buyers, and there are restrictions on foreign investors who might have the interest and the money,” he said.

“We actually expect a huge sell-off from locals once the market is back running. Many wanted trading to resume so they could sell shares and get a bit of financial relief.”

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