Zimbabwe Stock Exchange

[lakedaemonian]

http://www.mises.org/story/2532


Very interesting article.

I'd be keen to hear what people think about how relevant this article is in relation to the runup in share prices we've seen in NZ, Aussie, and US share markets in the last 5-6 years.

[Crypto Crude]

Hey lakedaemonian...
It was a rather interesting article...
SO the Stock market has risen 595% this year... inflation is at 1729% per year...
So this year Zimbabweian Stockmarket rises arenot keeping up with inflation and you are worse off...
for example, if you bought a share for one dollar today the share would have to be 1.0474 tomorrow for you have have broken even... (daily inflation of 1729/365=4.74)... otherwise you lose your purchasing power...

World Growth rates have been over 4% now for the last 4 years...
and we could be on one of the longest stretching runs of Strong World growth rates in a long long time...(if it continues which is likely then it could be longest ever, or at the top end of the list)
OECD last week re-vised there World Growth rate targets up, and are set to continue through strong growth in developing countrys such as China...
IMO Economys worldwide have been strong because of large spending power of Baby Boomers, and this is good for growth...
I donot see a crash coming this year... in a few years its quite a possibilty....
but yes, growth rates are the most important indicator of Stock market performance...
[8D]
.^sc

[Halebop]

quote:Originally posted by Shrewd Crude

SO the Stock market has risen 595% this year... inflation is at 1729% per year...
So this year Zimbabweian Stockmarket rises arenot keeping up with inflation and you are worse off...

According the the article the index is up 595% this calender year to date and up 12,000% in the last 12 months. Not sure if the inflation numbers are for a matching period but if so, the market has beaten inflation by a factor of almost 7.

[Crypto Crude]

1729-595=1134....
so the zimbabweian stockmarket will have to rise 1134% more this year to break even for the year taking into account inflation...
theres no doubt that their economy has been extremely strong over the last year or so...
zimbabwe have had large growth in the past and I doubt that the 10000% returns will continue...
say your index went from 1 point to 2... you make 100%... when you go from 5 points to 6, you still have the same increase but your return is only 20%...
so now that the Zimbabweian stockexchange is at a much higher level, Id now say that it would be one of the worst investments a person could make
[8D]
.^sc

[Halebop]

Shrewd inflation is an annual figure. The +595% market index is not, it is year to date (Calender Year from January to April when the article was written). The annual market figure is +12,000% (April 2006 to April 2007).


quote:Quoted from the article "Zimbabwe: Best Performing Stock Market in 2007?"

At last measure, the country's consumer price index was rising (i.e., the purchasing power of currency declining), at a rate of 1,729% a year.


quote:Quoted from the article "Zimbabwe: Best Performing Stock Market in 2007?"

The Zimbabwe Stock Exchange (the ZSE) is the best performing stock exchange in the world, the key Zimbabwe Industrials Index up some 595% since the beginning of the year and 12,000% over twelve months.

12,000% - 1,729% = 10,271%...
So inflation would have had to rise 10,271% more to break even with the market in April.

Read slower! [:p]

[Crypto Crude]

hail the bop...:)...

yes inflation of 1729% is a yearly figure....
and yes 595% is the rise in their stock market THIS YEAR...
once again...
SO by year end, if the current inflation rate was to continue then
the market would have to rise 1729-595=1134% more
for the investor not to loose their purchasing power.... or breakeven point....
this is my point....for the year of 2007 only....
so for this calander year, the inflation component must be worked off to get real returns, and then the profits kick in above 1729% return... so a lot of return is required to get there, and this year Stockmarket rises are not on track to get to the 1729%... (almost half way through the year and 595%)...1134% more to go....

the example was used for any investors looking at historical performance in Zimbabwe and blinking their eyes...Zimbabwe is a bad bad investment regardless of The magical year they have just had

The point that Im trying to make is from a slightly different angle of yours... hail the bop...:D...
[8D]
.^sc