Bad news for Zimbabwe-The scary side of the Zimbabwe Stock Exchange bull run


For many long-time ZSE watchers, the current bull-run is a scary throwback.

Back in October 2008, at an investment conference organised by Imara, a screen at the venue showed a live feed from ZSE trades.

In the crowd, visiting investors sat with mouths agape as they watched stocks in insurer Zimnat rise 1 150 percent in one session.

On the street, the Zimdollar that same morning was trading at Z$300 million on the US dollar.

Before long, the US dollar was trading at Z$17 billion.

By June 2008, the main ZSE index had reached 900 billion points, from just over 1.2 billion points at the start of that year.

Nobody was watching the index anymore.

Then, just as today, the ZSE was being driven by one major factor; investors anxious to get rid of surplus money in a market where they had few other investment options.

Inflation was estimated at 231 million percent in 2008.

By then, Zimbabwe had run out of inflation; the Government had in 2007 suddenly stopped giving out inflation data, out of embarrassment.

Then, just as now, leaving money in the bank was bad business.

“Why leave money in the bank?” said Emmanuel Munyukwi, who was CEO of the ZSE at the time.

“People are forced to come on the stock market.”

In 2007, the RBZ was running the money printing press round the clock, while today’s central bank does almost the same.

This time, Treasury Bills (TBs) and the RTGS are the new Zimdollars.

With bank assets now made up of a growing pile of TBs, there are questions about banks’ health today, just as there was in 2007 when the banks sat on worthless Zimdollar balances.

That year too, business leaders met Mugabe and, just like in 2017, they achieved nothing beyond plying him with praise.

Cash shortages were just as bad that year; so bad that RBZ ordered banks not to close over one weekend ahead of Christmas.

Even on the political front, matters in 2007 were just as heated as they are today in 2017.

Continued next page


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The Insider

The Insider is a political and business bulletin about Zimbabwe, edited by Charles Rukuni. Founded in 1990, it was a printed 12-page subscription only newsletter until 2003 when Zimbabwe's hyper-inflation made it impossible to continue printing.


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