2019 was a devastating year for all on the Zimbabwe Stock Exchange (ZSE) as pensioners lost a significant portion of their savings for the second time in just 10 years. Local equities have failed as an inflation hedge as pension funds are not allowed to invest outside our borders. While performing better than fixed income or money market assets the currency devaluation took its toll on the ZSE industrial index. Property markets fared better only losing about 30-40% in real terms over 2019.
The ZSE index started the year at ZWL18.94 billion (USD $5.4 billion) and ended at ZWL28.84 billion (USD 1.27 billion), which is a 77% real dollar loss for 2019. These losses are directly linked to the currency devaluation, where we saw the ZWL go from 3.5:1 to 22.7:1 in 2019 alone.
The year 2019 raised some serious questions and concerns for investors and pensioners alike. With no local based inflation hedging assets where do you invest? Or do we think the ZSE has gone too far and will we see a bounce back in 2020?
It is impossible to accurately answer the above two questions as we have seen time and time again that politics far outweigh economics. What we can say is that something needs to change, or else the ZWL will continue on its 2019 trend. The ZWL is being rejected more and more each day and at some point it may be abandoned totally.