Stockbrokers in Zimbabwe are struggling to explain to investors what is happened to their money after the government shut down the stock exchange.
The Zimbabwe Stock Exchange announced Sunday it suspended trade to comply with a directive issued by the Information Ministry late Friday that the bourse close.
It is the latest in a series of measures the government has implemented to try and stabilize the nation’s currency.
Traders have been inundated with calls from “shocked and stressed” investors all morning, Thedias Kasaira, managing director at Imara Edwards Securities, said by phone Monday from the capital, Harare.
Zimbabwe’s benchmark industrial index has risen more than sevenfold this year to a record. Investors have used the domestic bourse as a haven from the country’s collapsing currency and inflation of 786% — the highest rate in a decade.
Investors with cash in Zimbabwe prefer to buy shares to avoid their money losing value. Movements in domestic stock prices track the parallel currency markets on the streets of Harare, where the Zimbabwe dollar changes hands at about 100 per U.S. dollar, compared with the official rate of 57.35.
“People are looking at a hedge against inflation; that’s why they are switching from Zimbabwe dollars to equities,” said Lloyd Mlotshwa, head of equities at Harare-based IH Securities. “The stock exchange serves as a proxy to parallel market rates.”
ZSE Chief Executive Officer Justin Bgoni said he wasn’t immediately able to comment when contacted by phone.