SMALL investors have been hit hard by the dollarisation of the economy after it emerged this week that most investments were now worth an average US$5.
Zimnat Asset Management told unit trust holders that the dollarisation of the economy had eroded the value of investments the asset manager held in the equities market.
The company blamed a 90-day closure of the stock market last year and the dollarisation of the economy for the investment mishap.
Zimnat said: â€œThe conversion to the US dollar brought with it the realisation of the devastation hyperinflation had on US dollar-denominated monetary assets such as unit trusts. Unit prices which were in trillions in November opened at less than US1c when trading resumed in February.â€
A unit trust is a form of collective investment constituted under a trust deed. It is a pooled investment, which is an open-ended investment that gets bigger as more people invest and smaller when they take money out.
â€œDue to the bear trend on the ZSE, a combination of poor liquidity, unavailability of relevant financial information to value companies and little interest from foreigners, the industrial index fell by 32,64% and the mining index by 18,12% from 19 February to 31 March. The same trend was true for our funds which fell by an average 30% over the same period,â€ the company announced this week.
The asset manager added: â€œAs a result there was severe depletion of account balances in our unit trust funds with many accounts falling below US$5 …This is below the minimum account balance of US$$200.â€
But Zimnat hopes an anticipated growth of the economy will spill over to companies and share prices.
Even unit holders with investments worth over US$50 are not smiling because the asset manager says a liquidity crunch on the equities market means it would not be able to redeem such investments.
Reserve Bank of Zimbabwe chief Gideon Gono last year ordered the closure of the stock exchange to allegedly curb corruption, money laundering and speculation. â€” Own Staff.