Zimbabwe stocks more than doubled in the month of May as investors sought to cushion their money from the soaring inflation.
Bloomberg reports that the main industrial index on the Zimbabwe exchange has risen by a record 125% in the month.
This comes when inflations statistics released by the Zimbabwe National Statistics Agency (Zimstat) the month on month inflation rate in April was 17.64% while the year on year Inflation rate (annual percentage change) for the month of April as measured by the all items Consumer Price Index stood at 765.57%.
Commenting on the stocks trend, Stephen Mashozhera, head of an advisory at Harare-based Access Finance said:
When the index goes up, it’s signalling a deteriorating inflationary and exchange-rate outlook. Institutions buy equities as a hedge against inflation, which drives up prices, rather than keeping the money in debt instruments or in the bank.
Data provided by the Zimbabwe Stock Exchange suggests that using black market rates, the Harare market’s capitalization has increased 64% this year to $2.1 billion while at the officially pegged rate the increase is 244% to $6.1 billion, from $1.7 billion.