Zimbabwe's stock market is up 800% this year as investors seek shelter from blistering 176% inflation rate

• Zimbabwe's stock market is up roughly 800% in 2023, the world's biggest rally.
• The rally has taken shape as the country's annual inflation is up 176%.
• Local investors are turning to the stock market to protect their cash from devaluing. 

As strong as the S&P 500 has looked this year, 2023's most blistering stock rally is happening in Harare, Zimbabwe. The market is up more than 800% to start the year, according to Bloomberg data.

But in a country that's seen its share of economic crises, there's little reason to cheer. Local investors have piled into stocks in the hope of protecting the value of their cash as inflation hit 176% in June. The central bank's primary lending rate is now hovering at 150%, the world's highest. 

Launched in 1894, the stock market of Zimbabwe is relatively small. Its total capitalization is about $1.8 billion, with 55 stocks to trade, and daily turnover of about $650,000, per Bloomberg.

Hyperinflation has plagued Zimbabwe's economy for over a decade, ravaging the country's currency. The Zimbabwe dollar has plunged this year, losing more than 80% in the last two months alone, and continues to fall.

That makes it an unattractive store of value, forcing the central bank to offer other options.

Last year, the Reserve Bank of Zimbabwe introduced gold coins as alternative legal tender. And earlier this year, reports said Zimbabwe was preparing to launch a gold-backed digital currency.

The central bank plans to issue more of the "Mosi-oa-tunya" gold coins as well as launching the digital tokens, hoping that both currencies will be more reliable stores of value than the volatile Zimbabwe dollar.

Meanwhile, the US dollar is also used in Zimbabwe. In fact, the greenback was used in 77% of transactions this year after the dollar was reintroduced to rein in inflation caused by the Zimbabwean dollar. This is the second time since 2009 that the US currency was brought in.