IPEC seeks resolution of Old Mutual, PPC’s ZSE relisting

Tawanda Musarurwa

Zimbabwe’s insurance and pensions regulator is seeking a quick resolution that sees the re-listing of insurance giant, Old Mutual and cement maker Pretoria Portland Cement Co. Ltd (PPC) on the Zimbabwe Stock Exchange (ZSE) and have their fungibility restored.

The two companies’ shares, alongside Seed-Co, had their shares suspended last year as Government halted trading on the ZSE after investigations revealed that investors used the Old Mutual share price (Old Mutual Implied Rate) as a proxy exchange rate implied by its prices on foreign bourses such as the London Stock Exchange. While shares of Seed-Co International’s shares are now listed on the Victoria Falls Stock Exchange (VFEX), the Insurance and Pensions Commission (IPEC) said the continued suspension of Old Mutual and PPC needed a quick resolution as several local pension funds have their money tied up in these two stocks.

“The delay in listing and removing fungibility (suspension) of Old Mutual and PPC shares is of concern to the industry as it affects the determination of asset values of pension fund members and policyholders currently tied in the two counters,” said IPEC.

IPEC said last year’s suspension market trading had had a negative impact on the insurance and pensions sector’s equity holdings.

“As a result of the suspension of trade on the ZSE, market capitalisation level was affected as it declined from $219,16 billion recorded on 26 June 2020 before the suspension of trade to $179.50 billion by 28 August 2020.

Finance and Economic Development Minister Professor Mthuli Ncube said yesterday that “the matter was still under discussion.

“We are willing to see the re-listed,” said Prof Ncube.

Currently, 28 percent of pension funds’ assets are on the equities market. And over the period under review, the sector continued to increase its equities investment portfolio.

The value of investments in quoted equities increased by 706,47 percent from $3,71 billion as at 30 September 2019, to $29,92 billion as at 30 September 2020 notwithstanding suspension of trades of some major counters on the Zimbabwe Stock Exchange. Although Seed-Co International remains to only stock listed on the VFEX, it is expected that the US dollar-denominated bourse will provide relief to Old Mutual and PPC investors when these companies eventually list.

But VFEX will also provide a new investment platform for the country’s insurance and pensions firms, who are actively seeking US dollar assets to invest in following the promulgation in November of Statutory Instrument 280 of 2020, which allows these companies to carry out business in foreign currency.

Said Risk and Investment Management Consulting Actuaries (RIMCA) director Gandy Gandidzanwa:

“Pension funds can take advantage of the newly established Victoria Falls Stock Exchange by listing their property holding as a property fund,” he said.

“They need not float all of it, say 40 percent maximum. This generates immediate liquidity in the fund, and is also a potential source for offshore investment.”

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