Significant progress has been made in resolving the ban of the trading of shares of Old Mutual Limited and PPC on the Zimbabwe Stock Exchange (ZSE).
In March 2020, trading of shares of three companies – Old Mutual, PPC and Seed-Co Limited – was halted and were removed from the bourse after they were accused of providing proxy exchange rates (for example, the Old Mutual Implied Rate) implied by their prices on foreign bourses such as the London Stock Exchange.
However, Seed-Co switched to the United States dollar-denominated Victoria Falls Stock Exchange in November 2020, and eventually returned to the ZSE.
But Old Mutual and PPC are still in limbo.
Addressing the 47th Zimbabwe Association of Pensions Funds (ZAPF) annual congress, Finance and Economic Development Minister Professor Mthuli Ncube said a resolution was near.
“Engagements are underway with shareholders of the affected companies to find a lasting solution and I must say significant progress is being made,” he said in a speech read on his behalf by chief director for communications in the Ministry, Clive Mpambela.
The suspension of the companies’ shares from trading has weighed heavily on local pension funds which hold significant equity in the companies.
The anticipated resolution of the issue will also resolve emerging concerns around the frozen shares.
Last year, the country’s insurance and pensions sector regulator, the Insurance and Pensions Commission (IPEC), said it had noted inconsistencies in pension funds’ valuations of the companies that were suspended from the ZSE.
This was because pension fund managers on how to value their holdings in these companies, in an environment affected by inflationary pressures.
Meanwhile, it is likely that pension funds will continue to invest on the ZSE as it has largely outperformed inflation compared to other assets such as the money market.
But local pension funds are also looking to ramp up their offshore investments after IPEC gave the greenlight last year.