Zimbabwe stocks, Africa’s worst performers in 2014, fell for a sixth day to the lowest since January 2013 as a slump in consumer spending cut company profits and uncertainty over government policy lingered.
The Zimbabwe Industrial Index declined 1.5 percent by the close today in the capital, Harare today. That extended losses this year to 18 percent, the most among 13 sub-Saharan African bourses, according to data compiled by Bloomberg.
The government of President Robert Mugabe, in power for the past 34 years after winning elections last July, is battling a liquidity crunch because of a foreign-exchange shortage and the threat of deflation, according to the Finance Ministry. Mugabe’s administration is trying to revive an economy 49 percent smaller last year than in 2000, according to ZimTrade, a government agency that promotes trade and investment.
“There’s the obvious liquidity crunch that we have seen demonstrated in poor company results,” Lloyd Mlotshwa, head of sales at IH Securities in Harare, said by phone. “Then we have the fact that foreign investors haven’t seen any policy change since the elections.”
Delta Corp., the country’s biggest brewer, said on April 10 that lager sales fell 26 percent in the first quarter of the year, while Pioneer Corp., a transportation and industrial company, said April 1 its full-year loss widened as sales fell. Consumer spending declined about 30 percent in February, the Finance Ministry said April 7.
Concerns over Zimbabwe’s indigenization policy, which compels foreign-owned companies to sell or cede 51 percent of their shares to black citizens, continue to hamper investment, Mlotshwa said.
Indigenization Minister Francis Nhema said yesterday that government may relax some of the law’s conditions and treat companies on a one-on-one basis. Mlotshwa said that Nhema’s statement wouldn’t encourage investors.
“We’ve been saying to government that foreign investors want a clear-cut policy that applies across the board, that they don’t like these one-on-one deals,” he said.
Foreign investors make up about 60 percent of the trade on the Harare-based bourse, according to its website. Zimbabwe has the world’s second-biggest platinum and chrome reserves afterSouth Africa. It also has deposits of gold, coal and iron ore.