Zimbabwe Reserve Bank Governor John Mushayavanhu presented his monetary policy statement, during which he announced the launch by the central bank of the ZiG . Zimbabwe Stock Exchange All Share Index fell 99.95% since the introduction of ZiG, short for Zimbabwe Gold, on April 5.
The Zimbabwe Stock Exchange All Share Index fell 99.95% since the introduction of ZiG, short for Zimbabwe Gold, on April 5. The gold-backed ZiG succeeded the Zimbabwean dollar, which had lost 80% of its value this year. The bourse offers one of the few investment options in the southern African nation for investors to hedge against exchange-rate volatility and inflation. However, a surge in stocks usually is a cause for concern and not jubilation, as it signals that the next currency crisis is around the corner.
Share prices were converted by the bourse at a swap rate of 1 ZiG to 2,498 Zimbabwean dollars after an April 5 central bank order that the ZiG will be the new transacting currency used for everything from bank account balances to prices displayed in supermarkets.The decline in trading volumes has seen revenues of some brokerages fall at least 50% with most experiencing a"big hit to earnings," said Lloyd Mlotshwa, the head of research at Harare-based brokerage firm IH Securities.
With 80% of the economy using dollars for transactions, it is also a"major downside" for stockbrokers that the stock exchange, which has 56 securities decided to trade in ZiG, according to Enock Rukarwa, a research and investment consultant at FBC Securities."In the face of such headwinds stockbroking boutiques need to recalibrate their business models derisking commission income," he said.