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Zimbabwe’s stock market is facing growing pressure as major pension funds move away from equities and into property, weakening demand and pushing valuations lower across the board. This trend, combined with persistent currency instability and waning foreign investor participation, is contributing to a noticeable downturn on the Zimbabwe Stock Exchange (ZSE).
According to a quarterly market update by Imara Asset Management, pension funds once heavily invested in listed stocks have drastically reduced their exposure to the market. The shift has had serious implications for the ZSE, which has seen the All Share Index fall nearly 10% so far this year.
“Today, too many pension funds are heavily weighted toward property, which is overvalued in our view, and ‘alternative’ assets that have neither been marked down to realistic valuations nor have clear exit mechanisms,” wrote Shelton Sibanda, CEO of Imara Asset Management, and John Legat, a non-executive director at the firm.
The report, addressed to clients, warns that the imbalance could destabilise the market further if not corrected. Data from the Insurance and Pensions Commission, the sector’s regulator, shows that pension funds now hold only 25% of their total assets in equities, cash, and money markets — a sharp decline from the near 50% equity allocation seen in prior years.
The pivot toward real estate and alternative asset classes may appear logical as a hedge against inflation and currency risks, but Sibanda and Legat argue that these assets are mispriced and illiquid, distorting fund values and limiting investment flexibility. Without proper revaluation or viable exit routes, these assets remain locked and difficult to monetise.
“The failure to accurately value such holdings is worsening the situation,” they noted. “Overvalued pension funds lead to inflated pension payouts, putting further pressure on the ZSE and Zimbabwe’s Victoria Falls Securities Exchange (VFEX) in the absence of adequate contributions.”
Liquidity constraints, in turn, are fueling a vicious cycle. Forced selling by institutions to meet pension obligations is depressing market prices, compounding panic among remaining investors and undermining confidence in Zimbabwe’s capital markets.
With the ZSE once heralded as a haven during economic turbulence — a place where investors turned to hedge against hyperinflation and rapid currency depreciation — its current fragility underscores the need for a more balanced investment approach by institutional players. As things stand, the market continues to feel the weight of an asset allocation strategy that is increasingly skewed toward bricks over balance sheets.
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