The Zimbabwe Stock Exchange (ZSE) has tumbled since last Friday against a backdrop of a reduced settlement cycle and technical glitches on the Real Time Gross Settlement (RTGS) scheme.

The country’s main indices - industrial and mining - have dropped by 22 and 37 percent respectively by yesterday, major slumps in recent months.

Major counters suffered the greatest slump with bellwether mining concerns Bindura and Rio Zim losing 33 and 31 respectively on the back of recent statements by Reserve Bank of Zimbabwe governor Gideon Gono that he could soon crack the whip on mining giants he accused of “glaring discrepancies and financial prejudices”.

Gono made these remarks in last week’s mid-year monetary policy statement when he revealed that the central bank had engaged an international mining audit firm, Alex Stewart, to investigate the mining industry.

Market watchers, however, attributed this nosedive on the securities market to a reduced settlement period that changed to three days from seven days, which entails that stockbrokers now have less time to settle transactions.

More so, the country’s electronic transfer system, which handles huge investment funds, has been hit by poor transmission problems owing to a dilapidated telecommunication infrastructure.

The market was also characterised with increased offloading of stocks following the upward review of daily cash withdrawal limits from $100 billion ($10 new currency) to $1trillion ($100 new currency).

The recent review of daily cash withdrawals, the analysts said, had also seen banks offloading their securities portfolios in order to improve their liquidity positions.

“The abrupt review as opposed to a gradual change of maximum daily cash withdrawals could have prompted banks to dispose of their securities in order to meet cash demands of their clients,” said a financial analyst who asked for anonymity.

“Given the statutory reserves of 45 percent, banks are left with no option but to dispose their stocks to remain liquid for them to meet a surge in monetary demand.”

Meanwhile, unconfirmed reports indicated that the government could further reduce the settlement cycle to a single day.

Earlier this year, the ZSE dropped plans to have a single call over at the bourse following an outrage from stakeholders.

ZSE chief executive, Emmanuel Munyukwi, declined to comment on the matter. – ZimOnline.