Zimbabwe stock market plunges after Mugabe victory

Reuters News
Posted: Aug 05, 2013 7:04 AM
Zimbabwe stock market plunges after Mugabe victory

HARARE (Reuters) - Zimbabwe's main stock market index fell 11 percent on Monday in its first trading day since official results confirmed veteran President Robert Mugabe would extend his 33 years in power after trouncing Prime Minister Morgan Tsvangirai.

The industrial index fell to 205.57 points in the mid-morning session, with all the top-ten shares save for the local unit of insurance giant Old Mutual trading in the red.

The bourse's biggest company, Delta Corporation, the local unit of global brewer SAB Miller, crashed 20 percent to $1.20 a share.

Mugabe's ZANU-PF party won a two-thirds majority in parliament and has already said it may change a constitution approved in March after more than two years of acrimonious negotiations with Tsvangirai's Movement for Democratic Change.

The stock market slump is the clearest sign yet of how jittery the business community is about ZANU-PF, whose economic policy platform centres on the "indigenisation" of foreign-owned companies - essentially forcing them to cede majority control to local blacks.

Investors fear that ZANU-PF, emboldened by its landslide victory, could accelerate the programme.

"These are initial shocks in reaction to the election results. It was going to happen - maybe until there is some certainty on the policy front from the new government," a trader with a local stockbroking firm said.

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Besides economic nationalism, there are fears that ZANU-PF could push to reintroduce the Zimbabwe dollar, which was scrapped in 2009 after a 10-year economic meltdown that culminated in hyperinflation of 500 billion percent.

However, some analysts feel 89-year-old Mugabe's win offers a chance to patch up ties with foreign donors who suspended support and imposed sanctions amid charges of serious human rights abuses and wrecking the economy.

(Reporting by MacDonald Dzirutwe; Editing by Ed Cropley)