Zimbabwe stock market plunges after Mugabe victory

Zimbabwe President Robert Mugabe. (Reuters)

Zimbabwe President Robert Mugabe. (Reuters)

The bourse's Industrial Index fell 11% in a clear sign of jitters over Zanu-PF, whose economic policy centres on the "indigenisation" of foreign firms. 

Nine of the top-10 shares on the $5-billion bourse were trading in the red and its biggest company, Delta Corporation , the local unit of global brewer SAB Miller, crashed 20% to $1.20 a share.

In the run-up to the July 31 election, the index notched up a series of record highs on hopes that Prime Minister Morgan Tsvangirai might unseat the 89-year-old Mugabe at his third time of trying.

Instead, Mugabe, Africa's oldest head of state, won a crushing 61% in the presidential vote and a super-majority in parliament that allows Zanu-PF to change the Constitution at will.

Movement for Democratic Change (MDC) leader Tsvangirai has dismissed the poll as a farce and his party is preparing a legal challenge to what it has described as massive vote-rigging, although analysts say a court bid is unlikely to get very far.

No signs of violence, yet
There has been no sign yet of the violence that followed the last election in 2008 when 200 MDC supporters were killed.

Even without unrest, investors fear an emboldened Zanu-PF could accelerate its indigenisation programme by targeting foreign banks that it says are refusing to lend money to black farmers and small businesses.

"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 stockbroker said.

Tsvangirai lawyer Selby Hwacha told Reuters his legal team was preparing to challenge the election result before the Friday deadline.

Under the terms of a new Constitution, the courts must rule on the case with 14 days. Only after the all-clear can Mugabe be sworn in.

'Scientific dismembering'
The 14-year-old MDC, the only serious challenge to Mugabe's 33-year stranglehold on the former British colony, is in tatters.

"Of all our experience, nothing could have prepared us for the 2013 election and the systematic and scientific dismembering of the people's wishes," secretary general Tendai Biti, now outgoing finance minister, wrote on his Facebook page.

Biti's exit casts a shadow over a recovery he helped engineer from a decade-long economic crisis marked by bare supermarket shelves, 500-billion% inflation and tens of thousands fleeing destitution to neighbouring countries.

The rot only stopped when the 15-nation Southern African Development Community (SADC) forced Mugabe and Tsvangirai into a power-sharing government in 2009 that made scrapping the worthless Zimbabwe dollar one of the first things it did.

SADC has given a general thumbs up to the poll, suggesting it is tired of trying to mend Zimbabwe's broken politics and wants to move on.

In the staunchly pro-MDC capital and the second city of Bulawayo, most people went about their business as normal but remained shocked at the size of Mugabe and Zanu-PF's victory.

"I never thought I would consider looking for a job outside Zimbabwe but after the weekend, dusting off my passport has become an option," said Nixon Mkwananzi, a bank teller at a foreign-owned bank in Bulawayo.

Liberal policy turn
Eurasia Group, a political risk consultancy, said the election results "all-but-eviscerate any hopes of a more liberal policy turn".

However, it added that it did not necessarily mean a return to the chaos of the early 2000s, when pro-Zanu-PF militias over-ran white-owned commercial farms and the central bank printed money on an industrial scale.

Besides economic nationalism, many Zimbabweans were alarmed by comments made by Mugabe on the eve of the election about possibly reintroducing the Zimbabwean dollar.

Senior Zanu-PF official Patrick Chinamasa compounded those fears when he told reporters it was a "strategic retreat" to allow the use in 2009 of the US dollar, which he described as "the enemy's currency".

"I hope they don't dare do that.
That would be the end for this country," said newspaper vendor Oswald Jani. – Reuters

Client Media Releases

Changes at MBDA already producing the fruits
University open days: Look beyond banners, balloons to make the best choice
ITWeb, VMware second CISO survey under way
Doctoral study on leveraging the green economy
NWU's LLB degree receives full accreditation