HARARE, June 30 (Reuters) - Zimbabwe’s main stock market index has risen 35.6 percent in the first half of this year, as investors flee low money market interest rates and seek returns that at least keep pace with rising inflation, official data showed on Friday.
The southern African nation, which dumped its currency for the U.S. dollar in 2009, is grappling with shortages of cash, while dollars have largely disappeared from circulation.
President Robert Mugabe’s government last November introduced a surrogate currency known as the “bond note” at par with the dollar but that has not ended shortages. More than $140 million in bond notes have been circulated to date.
The Zimbabwe Stock Exchange’s (ZSE) industrial index closed Friday’s trade at 195.97 points, up from 144.5 points at the start of the year, figures from the exchange showed.
This is the highest level the index has reached since August 2014. The ZSE’s market capitalisation ended the half year at $5.77 billion, up from $4 billion at the start of 2017.
Traders said the ZSE’s rally, which started in March, had been helped by low money market rates, between 2 and 5 percent, forcing investors to seek better returns from stocks.
Gains in heavyweight stocks like brewer Delta Corporation , manufacturer Innscor Africa and telecoms firm Econet Wireless helped propel the main index.
Investors are also looking for above-inflation returns as prices rise. Analysts said dual pricing by most businesses, which charge more for bond notes and plastic and mobile money payments and less for U.S. dollars, was stoking inflation.
The World Bank has forecast Zimbabwe’s year-on-year inflation will reach 3.2 percent by December and accelerate to 9.6 percent next year. (Reporting by MacDonald Dzirutwe; Editing by Mark Potter)