The Zimbabwe Stock Exchange (ZSE) will resume trading on August 3, but multiple and/or dual listed companies Old Mutual Zimbabwe, PPC and Seed-Co International will remain suspended, Finance and Economic Development Minister Mthuli Ncube said today.
The local bourse was closed last month with Government claiming that it was investigating Old Mutual Zimbabwe with regards to its proxy exchange rate, derived from its multiple listing.
Diversified financial services provider, Old Mutual Zimbabwe is listed on the ZSE, the Johannesburg Stock Exchange (JSE) and the London Stock Exchange as well as on other regional stock exchanges.
“Whilst there was no observed evidence of the direct involvement of the listed entities themselves, significant evidence of a strong link between the price behaviour, and transaction patterms on internationally-listed shares, namely Old Mutual Plc, Seedco International and PPC, and the behaviour of the parallel market exchange rate was also established, with varying degrees of causality,” said the Finance Minister.
“In particular, the Old Mutual Implied Rate (OMIR), was observed to be the key driver of parallel market pricing behaviour, with many market players in the real economy using this highly visible rate as a benchmark for forward pricing and costing of goods and services, as well as determination of foreign exchange rates in market.
“Given the findings of the inquiry, Government has taken the decision to allow trading on the ZSE to resume on 3 August 2020.
“However, the three internationally listed stocks, namely Old Mutual Plc, Seed-Co International and PPC remain suspended from trading on the local bourse for the time being, whilst further consultations continue on the best way forward regarding their re-listing, under suitable rules.”
Government has already indicated plans to move Old Mutual Zimbabwe – at least – to a United States dollar-denominated stock exchange, presumably the soon-to-be-launched Victoria Falls Stock Exchange.
It is not yet clear whay will happen to PPC and Seed-Co International, but indications are that it will follow the path of Old Mutual Zimbabwe.
Zimbabwe’s financial authorities closed the bourse claiming that abuse of the OMIR was giving rise to” speculative and destabilizing” behaviour on the ZSE, which “was in large part contributing to broader macro-economic instability.”
Market watchers predict that the bourse could struggle to regain foreign investor confidence when it reopens next week, with a foreign investors expected to pullout due to the market unpredictability.
But the ZSE has defied the odds in the past.
The local equities market had been a positive run for the greater part of the year despite the currency depreciation and the COVID-19 pandemic.