Zim bourse to resume trading - minus Old Mutual and PPC

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South African-owned companies Old Mutual and PPC will be notable absentees when the Zimbabwe Stock Exchange (ZSE) resumes trading on 3 August 2020, Finance Minister Mthuli Ncube said in a statement released on Tuesday.

A third suspended company is Seedco International, which is listed on the Botswana Stock Exchange as well as the ZSE.

Trading on the ZSE was suspended on 23 June 2020 amid accusations that dually-listed counter Old Mutual was being used to siphon capital out of Zimbabwe.  

Following the suspension of trading, Zimbabwean authorities called for investigations on the activities on the ZSE, which it said were also undermining the Zimbabwe dollar through the widely used Old Mutual Implied Rate (OMIR). Accusations were levelled against Old Mutual by the ruling Zanu PF party amid calls to "eject it from the country's financial system."  

Authorities said the investigations had failed to find direct evidence of involvement by the companies themselves in the trading of their shares, but that they would remain suspended.  

"Whilst there was no observed evidence of the direct involvement of the listed entities themselves, significant evidence of a strong link between the price behaviours and transaction patterns on the internationally listed shares, namely Old Mutual, Seedco International and PPC Limited, and the behaviour of the parallel market exchange rate was also established, with varying degrees of causality," reads part of the statement.

"[T]he three internationally listed stocks, namely Old Mutual, Seedco International and PPC Limited remain suspended from trading for the time being, whilst further consultations continue on the best way forward regarding their re-listing, under suitable rules."

The statement also claimed that the OMIR was the key driver of "parallel market pricing behaviour," with many market players using it as a benchmark for forward pricing and costing of goods and services as well as determination of foreign exchange in the market.

Following the latest decision to resume trading, Old Mutual said it was working with authorities "to explore ways" to handle its listing so that the OMIR, which it "does not produce nor actively promote", does not continue to create the concerns raised in the past.

It said engagements with authorities have been progressing well and expressed confidence that an amicable solution will be found soon.

Seedco Group CEO Morgan Nzwere said the company would wait for regulators to conclude investigations. The company has not been engaged by authorities with regards to the matter.

PPC later said in a notice to shareholders that it had not been involved in any malpractice linked to the parallel foreign currency market and that it had been informed by the ZSE that it was in full compliance with the latter's listing rules.

"Notwithstanding the foregoing, the ZSE and PPC have agreed to halt trading in the shares of PPC Limited pending finalisation of the modalities on the resumption of trading. PPC will advise the market of any further developments on this matter," it said. 

* This story was updated on 1 August to reflect comment from PPC. 

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