Some foreign investors gamble on Zimbabwe

By Nelson Banya

HARARE (Reuters) - Foreign investors prepared to brave Zimbabwe's political and economic volatility could win big if Saturday's election brings policy changes in the crisis-hit but resource-rich country.

Despite an economic meltdown, surreal inflation and political uncertainty, some investors have cautiously positioned themselves for changes after a March 29 vote that is shaping up to be President Robert Mugabe's most serious test in 28 years.

Mugabe's two challengers -- ex-ally Simba Makoni and long-time rival Morgan Tsvangirai -- have placed the crippled economy at the centre of their campaigns.

Zimbabwe's 13 million people are grappling with chronic food, fuel and foreign currency shortages. Some foreign investors have fled, but a few are seeing opportunities and signing preliminary deals in sectors like telecommunications, power and construction.

"Zimbabwean assets are cheap, which is why some investors who believe we are at the end of a cycle are taking a closer look," an equities researcher, who declined to be named, said.

He said chances of a Mugabe loss were as high as they had ever been, but that even if the 84-year-old former guerrilla leader won, he might be forced into economic reforms.

Chinese companies are among those exploring opportunities in Zimbabwe, once the breadbasket of southern Africa, which boasts rich deposits of gold, uranium, platinum and diamonds.

Chinese deputy Commerce Minister Gao Hucheng, who was in Harare last month on a trade mission, said Beijing had invested $1.6 billion (804 million pounds) in Zimbabwe in 2007, although analysts say Chinese investment has yet to really take off.