Investors dumped Zimbabwean stocks every day since the military seized power on optimism that 93-year-old President Robert Mugabe will be forced to step down.

The stocks, which are denominated in US dollars and were used to hedge against rising inflation, fell 10 per cent on Monday to an eight-week low of 387.38, bringing the Zimbabwe Stock Exchange Industrial Index’s retreat since the army’s takeover on the morning of 15 Nov to 27 per cent.

The bourse’s market capitalisation has plunged $4.8bn (£3.6bn) in that period to $11.1bn, according to data compiled by Bloomberg and the Zimbabwe Stock Exchange.

Zimbabwe’s stocks soared this year after the government printed a new form of money — called bond notes — to deal with a cash shortage, stoking concerns over price growth in a nation that saw inflation jump into the billions of percent about a decade ago. While the southern African nation has mostly used the dollar since scrapping its own worthless currency in 2009, greenbacks have become scarce as Zimbabwe’s balance of payments position has worsened.

Investors pointed to the so-called Old Mutual gap as a sign of how unrealistic Zimbabwean valuations had become. While the insurer’s shares trade at the dollar-equivalent of about $2.52 in London and Johannesburg, they rose to $14.30 by 14 November in Harare, Zimbabwe’s capital. They have since fallen to $9.25.

The developments have “materially improved the prospect of a change in leadership and an ultimate re-opening of foreign capital inflow,” driving the Old Mutual Implied Rate down, Hasnain Malik, an analyst at Exotix Capital in Dubai, wrote in a note on Monday. “Falling local share prices are, until OMIR approaches zero, a reflection of increasing macroeconomic optimism.”