While markets around the world swoon, the Zimbabwe Stock Exchange is marking record gains as citizens turn to equities in a desperate attempt to protect their money from the country's stratospheric hyperinflation. The benchmark Industrial Index soared 257 percent Tuesday, besting a one-day record of 241 percent set Monday, with share prices of some companies rising by up to 3,500 percent. But before any Wall Street traders pack their bags and head to Africa, they should bear in mind that these figures are just another representation of Zimbabwe's collapsing economy and are almost meaningless in real terms.
Zimbabwe is staggering under the world's worst inflation, a looming humanitarian emergency and worsening shortages of food and most basic goods. Inflation is officially running at an annual pace of 231 million percent, but some experts put it at about 20 trillion percent.
"People are forced to come on the stock market," said Emmanuel Munyukwi, chief executive of the Zimbabwe Stock Exchange. "They believe that after hard currency, the stock market is the only viable option where you can get a bit of a return."
With the unofficial exchange rate against the U.S. dollar leaping from 30 million Zimbabwean dollars Friday to 100 million Monday, people are trying to hedge against inflation by turning to equities. Jonathan Waters, head of ZFN, a financial networking and analysis company, cautioned against too much optimism over the market's performance. "Nothing has really changed. The market is treading water," he said.