Zimbabwe stock market in 2010

The direction of the Zimbabwe stock market in the short to medium term is once again in focus. Of particular interest is what might happen to the market if there is evidence of a solid political settlement which could deliver economic stability, the rule of law, boost business and consumer confidence at home and spark the interest of investors abroad. Could there be a massive injection of foreign money into the country through the stock exchange?

By some accounts, it may be too late to ask that question given the phenomenal rise in the values of a few key counters on the local bourse since the dumping of the Zimbabwe dollar in the first quarter of 2009. According to this school of thought, most of the speculative money has already arrived, much to the benefit of the Econets, the La Farges, the Rio Tintos and the BATs of this bourse. I suspect that there is something there, but given that these counters dominated the market before dollarization, it may be that what we have here is old money in new wallets.

There are those who believe that the foreign investing public still lacks confidence in the future of the economy given the tectonic nature of the so-called inclusive governing environment, where either of the major players seem bent on eating each the other's lunch, if not corpse! I tend to agree with them. For a start, even the highest quoted stock on the bourse is still a penny stock. When we begin to see a few stocks trading above five dollars, we may begin to believe that the new money has arrived.

For now, we must continue to wonder why African Sun and other tourism related stocks continue to wallow in "shallows and miseries", given the up-coming World Cup in neighbouring South Africa which should, if only in the short term, shore up these stocks. After all, tourism is likely to be one of the fastest growing segments of the economy going into the future, if international visitors return in significant numbers.

It appears that while there should be little doubt that some speculative money is at play in the market, the real money is still off-shore and business and government leaders should continue to work hard to bring it across the oceans and the Limpopo.