(Bloomberg) -- Zimbabwe shares posted their longest 2010 rally as the government reviews forcing companies to transfer ownership to black citizens. Exotix USA Inc. and Kingdom Stock Brokers Ltd. said further gains may be limited.

The 75-stock ZSE Industrial Index, which climbed 51 percent last year, rose for the past five days, increasing 9 percent. The index is still 9.6 percent lower than when the President Robert Mugabe signed the Indigenization and Empowerment Act into law on Feb. 5.

The indigenization law affects companies with more than $500,000 of assets, including Anglo Platinum Ltd., Impala Platinum Holdings Ltd. and Aquarius Platinum Ltd., three of the world’s four-biggest producers of the metal, which all own mines in Zimbabwe. The country has the world’s second-largest reserves of platinum after South Africa. Old Mutual Plc, Africa’s biggest insurer, also owns properties and a life-insurance operation in the country.

“The stocks have gained on talks to review the indigenization act and how this will be implemented sector by sector,” Patrick Saziwa, an equity trader at Kingdom, said by phone from the capital Harare. “Stock gains may be limited from here until there is more clarity.”

The law stipulates black ownership must be completed within five years, without providing a clear mechanism for the transfer of shares to black Zimbabweans.

Rally

Zimbabwe’s benchmark index has surged 75 percent since resuming trading in February last year after the Movement for Democratic Change, led by Morgan Tsvangirai, formed a coalition government with Mugabe’s Zimbabwe African National Union- Patriotic Front party. Shares have fallen 7.9 percent this year as the MDC accused Mugabe of repeatedly violating the power- sharing accord and making several key appointments without consultation.

South African President Jacob Zuma this week urged Western nations to lift sanctions including travel bans and asset freezes targeted against Mugabe and his allies, saying they were undermining the nation’s coalition government.

Clarity on Zimbabwe’s “coalition government and recent proposals to empower local business ownership is necessary and could act as a catalyst toward further investment interest, and a rise in the stock market as well as much needed capital from western donors” Ashley Bendell, a New-York based associate director at Exotix, said in an e-mailed response to questions.

A failure to make “significant changes” may cause stocks to decline between 10 and 20 percent from current levels this year, Bendell said.

The economy is recovering from a decade of recession that followed Mugabe’s seizure of white-owned commercial farms to redistribute to black subsistence farmers deprived of land during colonial rule. The program slashed exports.

The benchmark measure may increase to 178 by the end of December if the political environment stabilizes, according to Kingdom.

By Bloomberg