BRITISH investment firm Africa Opportunity Fund Limited (AOF) has recorded a sharp decline in the value of its Zimbabwe Stock Exchange (ZSE)-listed portfolio, which plunged by nearly 47% to US$4,1 million by June 2025 as the Zimbabwe Gold (ZiG) currency eroded returns.
The ZSE continues to suffer from an exodus of foreign investors, with international funds battling to repatriate earnings and preserve value amid a volatile currency and persistent macroeconomic instability.
Financial analyst Ranga Makwata told businessdigest earlier this year that foreign investor participation on the ZSE has dwindled drastically, from a peak turnover of about US$184 million in 2013 and US$282 million in 2014 to roughly US$25 million in 2024.
In its half-year report for the period ended June 30, 2025, AOF said the ZiG’s volatility and repatriation challenges had significantly eroded its holdings in First Mutual Properties Limited (FMP) and Mashonaland Holdings Limited.
“The total carrying value of the investments held by the Master Fund amounted to US$14 555 227 as at June 30, 2025, of which US$4 060 321 represents investments listed on the Zimbabwe Stock Exchange,” AOF said in its half-year report ended June 30, 2025.
“Based on quoted prices on the Zimbabwe Stock Exchange, these investments would have been valued at US$10 077 202.
“However, owing to the ongoing market instability, hyperinflationary economy and difficulty repatriating ZiG currency to USD, a discount has been applied to the market price to arrive at the fair value of US$4 060 321.”
During the review period, Mashonaland Holdings’ share price declined by 25% in ZiG terms, while FMP gained 14%, resulting in a combined 14% drop in ZiG that translated into a 47% loss in US dollar terms after applying exchange rate adjustments.
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AOF, a closed-end investment company incorporated in the Cayman Islands and listed on the Specialist Fund Market of the London Stock Exchange, holds diversified investments across several African markets.
In its 2024 annual report, the fund had valued its Zimbabwe holdings at US$13,03 million as of December 31, 2024, with US$7,6 million invested in ZSE-listed companies.
However, AOF said the Zimbabwean investment climate remains hampered by restrictive government interventions, particularly measures affecting foreign currency repatriation.
“In fact, many investor attempts to repatriate funds were addressed by the government through the issuance of T-Bills. Similar to our ZiG discount, the company adjusted the official exchange rate by utilising the inflation differential with the US dollar,” it said.
AOF also noted that it continued to apply a 20% surrender adjustment to account for government retention policies and argued that official inflation data only captured about 80% of actual price growth.
“This discount factor changes every month. The consequence of applying this discount factor is that Zimbabwe dollar prices of the company’s investments listed on the Zimbabwe Stock Exchange in ZiG converted into US dollars as at June 30, 2025 at a discount rate of 59,7% (there was no discount on the ZiG currency as at June 30, 2024),” it said.
Although the ZiG appeared relatively stable during the first half of the year, AOF said inflation differentials between Zimbabwe and the United States remained much wider than those implied by the official rate, worsened by scarcity of the local currency.
“Consequently, AOF’s internal estimate of the ZiG’s external value depreciated by 38% in H1 (first half),” it said.
