Investors prepare for Zimbabwe poll
Thématique :
zimbabwe
By Nelson Banya, Business Report, March 26, 2008
Foreign investors prepared to brave Zimbabwe's volatility could win big after Saturday's election.
Despite an economic collapse, surreal inflation and political uncertainty, some investors are cautiously positioned for policy shifts after a vote that is shaping up to be President Robert Mugabe's most serious test in 28 years.
"Zimbabwean assets are cheap, which is why some investors who believe we are at the end of a cycle are taking a closer look," said an equities researcher, adding that even if Mugabe won, he might be forced into reforms.
Chinese firms are well placed. On a trade mission in Harare last month, deputy commerce minister Gao Hucheng said Beijing had invested $1.6 billion (R12.9 billion) in Zimbabwe last year. Last year Sinosteel took over Zimasco, which owns the country's largest ferrochrome producer.
Chinese firms have set their sights on gold, platinum and coal mines, as well as the telecoms, power and construction sectors, by signing deals and opening negotiations for future investment.
And Beijing has doled out hundreds of millions of dollars in loans to finance agriculture.
Meanwhile, London-listed Lonrho plans to raise $140 million through investment arm LonZim to buy assets in Zimbabwe, hoping to "benefit from any radical future improvement of the economy".
It has bought a listed telecoms firm and a chemicals manufacturer for less than $6 million.
Russian group Renaissance Capital, LonZim's placement agency, last year bought out Absa's stake in CBZ Holdings, Zimbabwe's second-largest bank.
And African Banking Corporation officials say Citigroup has approved a $25 million deal for a 20 percent shareholding.
The equities researcher said the Zimbabwe stock exchange's market capitalisation had fallen from $9.79 billion in 1997 to about $3 billion, showing its 80 stocks were heavily discounted.
But such bargains come with risks. Investor sentiment was dealt a blow this month by a law seeking to transfer control of all foreign firms to Zimbabweans.
No one is packing up to leave, with Rio Tinto, Anglo Platinum and Impala Platinum showing readiness to ride the storm.
But some commentators say the damage has been done.
"The consequences … are immense, and effectively the final nail in the economy's coffin," wrote commentator Erich Bloch.
Foreign investors prepared to brave Zimbabwe's volatility could win big after Saturday's election.
Despite an economic collapse, surreal inflation and political uncertainty, some investors are cautiously positioned for policy shifts after a vote that is shaping up to be President Robert Mugabe's most serious test in 28 years.
"Zimbabwean assets are cheap, which is why some investors who believe we are at the end of a cycle are taking a closer look," said an equities researcher, adding that even if Mugabe won, he might be forced into reforms.
Chinese firms are well placed. On a trade mission in Harare last month, deputy commerce minister Gao Hucheng said Beijing had invested $1.6 billion (R12.9 billion) in Zimbabwe last year. Last year Sinosteel took over Zimasco, which owns the country's largest ferrochrome producer.
Chinese firms have set their sights on gold, platinum and coal mines, as well as the telecoms, power and construction sectors, by signing deals and opening negotiations for future investment.
And Beijing has doled out hundreds of millions of dollars in loans to finance agriculture.
Meanwhile, London-listed Lonrho plans to raise $140 million through investment arm LonZim to buy assets in Zimbabwe, hoping to "benefit from any radical future improvement of the economy".
It has bought a listed telecoms firm and a chemicals manufacturer for less than $6 million.
Russian group Renaissance Capital, LonZim's placement agency, last year bought out Absa's stake in CBZ Holdings, Zimbabwe's second-largest bank.
And African Banking Corporation officials say Citigroup has approved a $25 million deal for a 20 percent shareholding.
The equities researcher said the Zimbabwe stock exchange's market capitalisation had fallen from $9.79 billion in 1997 to about $3 billion, showing its 80 stocks were heavily discounted.
But such bargains come with risks. Investor sentiment was dealt a blow this month by a law seeking to transfer control of all foreign firms to Zimbabweans.
No one is packing up to leave, with Rio Tinto, Anglo Platinum and Impala Platinum showing readiness to ride the storm.
But some commentators say the damage has been done.
"The consequences … are immense, and effectively the final nail in the economy's coffin," wrote commentator Erich Bloch.
