HARARE (Bloomberg) –Traders have abandoned Zimbabwe’s stock market as a lockdown imposed to curb the spread of the coronavirus adds to the strains on an economy that was already contending with severe drought, hyperinflation and a shortage of foreign exchange.
The volume of shares changing hands on the bourse has plunged by 55% since the government imposed strict measures to limit movement on March 30, said Justin Bgoni, chief executive officer of the Zimbabwe Stock Exchange. Foreign participation has dwindled to just 10% of all activity, from 34% last year.
“Both the Covid-19 outbreak and the subsequent lockdown has put a strain on our listed companies, with some having to suspend operations, which has an effect on performance,” Bgoni said in an emailed response to questions.
The fall-off in trading suggests the exchange is losing its status as a haven for local investors, who have in recent years turned to stocks as a way of protecting their savings from the ravages of inflation, which soared to 676% in March. The bourse’s market capitalization in local currency terms has doubled since November, but a crash in the Zimbabwe dollar means that stock values in dollar terms have plunged to their lowest in a decade.
Covid-19 and the measures to counter it are only the latest setbacks. In March, Bgoni bemoaned a government decision to restrict trading in three key dual-listed stocks, meaning they are no longer fungible, or regarded as being equal in value to their listings on other exchanges.
“The suspension of fungibility has dampened the attractiveness of our market for potential issuers from other markets and consequently sets us back in terms of regional initiatives,” he said.
World Stocks
Stock markets slid on Friday following more crushing economic data and a hit to hopes of finding a coronavirus vaccine, analysts said.
European equities were knocked also by news that EU leaders stood divided over the size of a financial rescue package to stimulate the bloc’s economy left battered by the pandemic.
“They seem to have agreed on the idea of a recovery fund while leaving the details for a future date,” Oanda analyst Craig Erlam told AFP.
The United States on Friday approved nearly half a billion dollars in new stimulus but European leaders were split on their own measures as the world sought to salvage economies hammered by the coronavirus pandemic.
Erlam added that “investors may also be reacting badly to remdesivir’s performance in its first randomised clinical trial”.
US stocks ended flat Thursday and Tokyo dropped Friday, following reports that the closely-watched antiviral drug remdesivir has had no effect on patients in a coronavirus test.
“This was a ray of hope earlier this week and already we’re learning the pitfalls of getting too excited about these cures at the early stages of testing,” Erlam said.
Economic data released Friday added to the bleak outlook.
German business confidence plummeted to a record low in April as firms fret over COVID-19 fallout, the closely-watched Ifo survey said, describing morale as “catastrophic”.
The institute’s monthly business climate index tumbled to 74.3 points, down from March’s 85.9 points.
Britain’s retail sales by volume meanwhile slumped by a record 5.1 percent last month as the country’s lockdown shut clothes and other stores, offsetting surges in food and alcohol purchases and online buying, official data showed.
The European readings came after the US on Thursday said 4.4 million people applied for unemployment benefits last week, taking the total virus-fuelled job losses in the country to more than 26 million.
Adding to the downbeat mood was a Financial Times report that said initial trials of the remdesivir coronavirus drug being developed by Gilead Sciences had flopped.
