ZSE to reopen in two weeks’ time: Mthuli
Staff Reporter
HARARE, The Financial Intelligence Unit is set to conclude investigations into allegations of malpractices leveled against some counters on the Zimbabwe Stock Exchange in two weeks’ time, before the bourse can resume trading again.
Finance minister Mthuli Ncube today told a Daily News post midterm-budget review meeting that the government will deliberate on the modalities of reopening the ZSE.
“We are waiting for the conclusions for investigations made by the financial intelligence unit .They should be able to conclude within the next week or two and then we will review that and then decide on the modalities for reopening but it will reopen for sure,” he said.
Following a Government directive, the Zimbabwe Stock Exchange (ZSE) suspended all trades on the 26th of June 2020. According to the Government statement, the closure of the ZSE was meant to stop the slide of the local currency (ZWL$) on the unofficial markets, alleging that the ZSE along with Ecocash (mobile payment platform) were collaborating to sabotage the country by causing the collapse of the ZWL$.
At the core of Government’s argument is the Old Mutual Implied Rate (OMIR) which is a rate implied by market participants when they trade in Old Mutual Limited shares listed on the ZSE. The performance of the insurance and pensions industry works hand in hand with the economy.
The sector has not been spared by the suspension of trading considering the Q1 Pensions Industry Report shows that out of a total asset base of ZWL 29,8bn, investments in equities made up 35,3% of the industry assets.
Combined with investment property, these 2 asset classes make up 82, 7% of the assets, due to their hedging and value preserving nature in inflationary periods.
Investment analysts have expressed concern on the critical role that the insurance and pensions industry play on the ZSE and on the economy at large.
Last week, the Investment Professionals Association of Zimbabwe (IPAZ) in a statement said ZSE closure created an existential threat to the operations of companies, pension funds, short term insurance, stock brokers, asset manager’s custodial services and banks.
“Property is illiquid relative to shares so from a liquidity perspective, shares are the most important asset for most institutions. Pensioners rely on monthly/lump-sum disbursements from their pensions whilst insurance companies have to pay claims and benefits to their clients. Closing the market means that all these stakeholders cannot access their funds. Where will pension funds, insurers get money to pay their clients if the market is closed indefinitely? ,” said IPAZ
