Staff Writer
Old Mutual Zimbabwe says engagements with authorities continue on the potential lifting of the suspension from trading on the main bourse, the Zimbabwe Stock Exchange (ZSE).
In June 2020, Old Mutual Zimbabwe, PPC, and Seed Co International were suspended by the government from Zimbabwe’s main bourse due to the fungibility of their shares.
The government during that time argued that the fungibility of the shares was being used to fuel the parallel market, as the Old Mutual implied rate (OMIR) was used to determine a forex rate that was widely adopted as the market-determined foreign currency exchange rate—one that was higher than its official counterpart.
In an interview, group chief executive Samuel Matsekete said the matter is under the purview of the principals.
They negotiate and engage with the authorities here because the OML on the listing really is our holdings.
“There have been a number of engagements to try and see if there can be a way forward that allows parties invested in the share or those that want to invest in the share to trade, but we still are having the share suspended.
“I believe that where we are now with the authorities is to explore really what could be done in the meantime if the suspension can be lifted,” he said.
Experts believe the relisting of OMZIL will create another liquid counter on the ZSE, especially at a time some blue-chip counters have migrated to the Victoria Falls Stock Exchange (VFEX).
According to Matsekete, the suspension has not had an effect on group operations, as it continues to grow.
“There has not been inter positioning of the business in the market, we have continued to grow and extend our reach to even customer segments that we would have not served as well as we are now doing.
“We have also continued to acquire new customers and continued to receive the support of regulators and policymakers in terms of the initiatives that we are undertaking as a business in Zimbabwe,” he said.
However, Matsekete said there has been indirect adverse impact, which would probably be experienced by anyone that is managing assets and those holding the Old Mutual Share.
“That impact shows in that you are not able to fully meet your old clients’ requirements; some of them would have wanted to sell, some would have wanted to buy, and we have seen these implications come through to say, ‘How can I access the Old Mutual Share?’ or ‘Can I sell the shares?’ and some of the funds that we manage hold these positions,” he said.
Authorities argued the fungible counters were being used as vehicles of capital flight by investors who would buy a local stock of Old Mutual and then sell off on South Africa’s Johannesburg Stock Exchange.
Lloyd Mlotshwa, the head of research at broking firm IH Securities, in an earlier interview, said the current suspension has negatively impacted the numerous public investors in Old Mutual, including pensioners in this country who are indirect victims and have lost value on their capital.
He said the relisting allows them to at least partially recover their invested capital.
“The ZSE will benefit greatly from the re-admission of Old Mutual; it creates another liquid investment alternative in a blue-chip business with an extensive track record in this country. “This will lift the current market capitalisation of the ZSE and improve daily trading volumes,” he said.
Investment analyst Enock Rukarwa also highlighted that the relisting is a welcoming initiative to investors, as it restores fundamentals around share capital appreciation and provision of an efficient exit route for current investors.
“More so, given a situation where stock pick quality has dissipated on account of VFEX migrations, Old Mutual re-listing will ignite increased attention of the ZSE as investor options broaden.
“However, fungibility has to be restored to foster efficient trading, especially for foreign investors,” he said.
