Zimbabwe’s stock market plunged on Monday, the first trading day since confirmation of President Robert Mugabe’s landslide election victory, as fears spread that his ZANU-PF party might target foreign-owned businesses or scrap the U.S. dollar.
The bourse’s Industrial Index fell 11 percent in a clear sign of jitters over ZANU-PF, whose economic policy centers on the “indigenization” of foreign firms – essentially forcing them to cede majority control to local blacks.
Nine of the top-10 shares on the $5 billion bourse were trading in the red and its biggest company, Delta Corporation, the local unit of global brewer SAB Miller, crashed 20 percent to $1.20 a share.
In the run-up to the July 31 election, the index notched up a series of record highs on hopes that Prime Minister Morgan Tsvangirai might unseat the 89-year-old Mugabe at his third time of trying.
Instead, Mugabe, Africa’s oldest head of state, won a crushing 61 percent in the presidential vote and a super-majority in parliament that allows ZANU-PF to change the constitution at will.
Movement for Democratic Change (MDC) leader Tsvangirai has dismissed the poll as a farce and his party is preparing a legal challenge to what it has described as massive vote-rigging, although analysts say a court bid is unlikely to get very far.
There has been no sign yet of the violence that followed the last election in 2008 when 200 MDC supporters were killed.
Even without unrest, investors fear an emboldened ZANU-PF could accelerate its indigenization program by targeting foreign banks that it says are refusing to lend money to black farmers and small businesses.
“These are initial shocks in reaction to the election results. It was going to happen – maybe until there is some certainty on the policy front from the new government,” a trader with a local stockbroker said.
Tsvangirai lawyer Selby Hwacha told Reuters his legal team was preparing to challenge the election result before a Friday deadline. Under the terms of a new constitution, the courts must rule on the case with 14 days.
Only after the all-clear can Mugabe be sworn in.
The 14-year-old MDC, the only serious challenge to Mugabe’s 33-year stranglehold on the former British colony, is in tatters.
“Of all our experience, nothing could have prepared us for the 2013 election and the systematic and scientific dismembering of the people’s wishes,” secretary general Tendai Biti, now outgoing finance minister, wrote on his Facebook page.
Biti’s exit casts a shadow over a recovery he helped engineer from a decade-long economic crisis marked by bare supermarket shelves, 500 billion percent inflation and tens of thousands fleeing destitution to neighbouring countries.
The rot only stopped when the 15-nation Southern African Development Community (SADC) forced Mugabe and Tsvangirai into a power-sharing government in 2009 that made scrapping the worthless Zimbabwe dollar one of the first things it did.
SADC has given a general thumbs up to the poll, suggesting it is tired of trying to mend Zimbabwe’s broken politics and wants to move on.
In the staunchly pro-MDC capital and the second city of Bulawayo, most people went about their business as normal but remained shocked at the size of Mugabe and ZANU-PF’s victory.
“I never thought I would consider looking for a job outside Zimbabwe but after the weekend, dusting off my passport has become an option,” said Nixon Mkwananzi, a bank teller at a foreign-owned bank in Bulawayo.
Eurasia Group, a political risk consultancy, said the election results “all-but-eviscerate any hopes of a more liberal policy turn”.
However, it added that it did not necessarily mean a return to the chaos of the early 2000s, when pro-ZANU-PF militias over-ran white-owned commercial farms and the central bank printed money on an industrial scale.
Besides economic nationalism, many Zimbabweans were alarmed by comments made by Mugabe on the eve of the election about possibly reintroducing the Zimbabwean dollar.
Senior ZANU-PF official Patrick Chinamasa compounded those fears when he told reporters it was a “strategic retreat” to allow the use in 2009 of the U.S. dollar, which he described as “the enemy’s currency”.
“I hope they don’t dare do that. That would be the end for this country,” said newspaper vendor Oswald Jani.