THE ruling Zanu PF party has repeated its call for financial services group Old Mutual Zimbabwe (OMZ) to be delisted from the Zimbabwe Stock Exchange (ZSE) and proposed that a new bourse be opened and trade only in United States dollars.
BY TATIRA ZWINOIRA
The party blames Old Mutual for causing “runaway inflation through illegal parallel exchange market rates” and yesterday, it issued another statement to “clarify” last week’s outburst.
“Zanu PF is totally opposed to the fungibility of the Old Mutual shares and to this end it reaffirms its policy position that the ZSE should compulsorily de-list the Old Mutual Limited shares from trading on the ZSE,” acting party spokesperson Patrick Chinamasa said.
“To protect the interests of the 30 168 shareholders of Old Mutual Limited, Zanu PF is recommending to its government that it sets up a stock exchange which will trade only in US$. Old Mutual Limited can then be allowed to migrate, find home and trade on such a foreign currency-denominated counter in Zimbabwe.”
He said trading on other counters had been normal and was recommending that trading be resumed after government shut down the ZSE trading last month in a bid to arrest the fall of the local currency against major currencies.
Zanu PF’s ire against OMZ is due to the Old Mutual Implied Rate (OMIR), a comparison of the price of shares of the company’s listing in the United Kingdom, South Africa and locally.
The OMIR has been used by analysts (not by Old Mutual itself) as an indicator of the value of the Zimbabwe dollar against the greenback, which the government has blamed for the rapid loss of value of the local currency.
Bizarrely, Chinamasa said setting up a foreign exchange-denominated stock exchange would be an appropriate institution for raising and attracting foreign direct investment into Zimbabwe despite shutting down ZSE, a move which local stockbrokers have confirmed is already sending investors away in droves.
“Companies that want to invest in Zimbabwe and require foreign currency would then list on such a stock exchange to attract foreign direct investment in foreign currency for investment. The details of implementing this recommendation are left to the government including the timeframe within which this recommendation can be implemented,” Chinamasa said.
“It is the desire of Zanu PF that implementation be in the shortest possible time to avoid undue disruption to inflows of investment capital. Zanu PF says an emphatic NO, to self-enrichment through speculative trading and externalisation.”
OMZ is one of the biggest companies in Zimbabwe and is a subsidiary of Old Mutual Limited South Africa, a large pan-African investment, savings, insurance, and banking group.
OMZ has since issued a statement saying it remained committed to serving its customers and to contribute to the development and growth of the economy.