Earlier this week it was announced that the Zimbabwean Stock Exchange (ZSE) would be open for trade for the first time since November 2008. Does this provide a sign that this mineral and agriculture rich country may be reaching a point where firms should begin to give serious consideration to reinvesting in the troubled African country?

Information on the ZSE remains sketchy on the internet but according to media reports the only company that traded was Apex, an engineering and stationery firm. The company sold 3,026 shares, each for one US cent.

There are apparently 80 stocks listed on the ZSE at the moment and the stocks are trading in US dollars due to the hyperinflation that has destroyed the value of the Zimbabwe dollar. 

Capital markets remain an integral part of “wealth” for both consumers and the corporate sector and for this reason it is vital for an economy to retain a fully functional stock market.

Many consumers or retail investors retain a big portion of their wealth, insurance or pension funds in the equity markets despite the recent turmoil. If the Zimbabwean stock market can begin functioning properly and provide opportunities for retail investors to grow their wealth, this begins to provide an underlying springboard for the economy.

Similarly, the country has been ravaged by nearly two decades of civil war and dictatorial rule, setting the country back a long way in terms of infrastructure. Providing a market place where firms can begin to raise capital is also a starting point in the rebuilding process.

Many blue-chip resource companies including Impala Platinum, Aquarius, Anglo American and Anglo Platinum have retained both precious and ferrous metal operations in Zimbabwe despite the political turmoil. Perhaps their patience will be rewarded in the next decade if business begins to find its feet.

Many sectors in Zimbabwe including tourism, mining, manufacturing, tobacco, farming and telecomms were extremely healthy and profitable for investors before political interference took its toll. Currency problems – Rand, Zimbabwe Dollar, US Dollar – are likely to weigh on an investors decision to put money into the system. Investors are unlikely to want to invest in something were inflation is simply pushing their investments backward.

The Johannesburg Stock Exchange (JSE) has recently launched its own Africa Board as a way to encourage the primary or secondary listings of other African businesses in South Africa. This week, Namibian financial services firm TrustCo launched on the JSE and there are apparently plans for other resource firms to list locally.

A functioning Zimbabwean exchange would help the flow of capital and wealth into the country.

While it may not constitute sound financial advice: Investors are regularly told that it is impossible to identify the “bottom” of an investment market, perhaps Zimbabwe is as near its “bottom” as it is likely to go?

Do Ferronews.com readers have thoughts on the Zimbabwean situation and whether or not there would be opportunities to invest in the country?