The drop came after the bourse had recorded a jump in turnover in July. Last month, Youth Development, Indigenisation and Empowerment Minister Saviour Kasukuwere gave mining companies and foreign banks 14 days to comply with the empowerment laws.
Kasukuwere went a step further advising Mines Minister Obert Mpofu to cancel the operating licence of Blanket Mine saying it had failed to comply with the empowerment legislation.
Kasukuwere later backtracked saying the mining company should submit another proposal. The move alone ruffled the feathers of foreign investors and they sold more than they bought during the month.
Statistics from ZSE showed that foreigners bought shares worth US$20 502 233,32. They sold shares worth US$ 22 921 504,56. Even in terms of volume, foreigners sold more than they bought during the course of the month.
While foreign investors bought 69 726 341 shares, they went on to sell 87 055 469 shares. Foreign investors have been driving activity on ZSE as locals do not have the cash to participate due to liquidity constraints.
As such foreign investors have been determining the fate of the bourse and when they sneeze, the market catches the cold. The performance of the stock exchange is an indicator of the state of the economy and is closely followed by investors.
Its performance affects stock brokers who derive their income from commissions on the buying and selling of shares. Analysts say activities on ZSE were also affected by the country’s political risk and that partners in the government were not speaking with one voice on policy issues.
They say there is no clarity on the indigenisation legislation and as a result foreign investors are scared. Finance Minister Tendai Biti called on Wednesday for the introduction of other alternative markets such as bond and commodities markets, a move analysts say would still not work in the absence of unity of purpose among politicians.