Gono Reverses Biti Decision as Battle Rages on

AS the battle between Finance Minister Tendai Biti and Reserve Bank governor Gideon Gono rages on the central bank has reversed the decision made by the former last week to restore dual-listed shares offshore.

Finance Minister Tendai Biti last Monday announced a cocktail of measures which the Zimbabwe Stock Exchange (ZSE) would operate under to allow trade to resume.

The stock market had not been trading for three months.

Biti said although a number of issues were still outstanding it was “wise and appropriate” to find common ground on the sticking issue between ZSE and Securities Exchange Commission while the market was trading.

Biti last week said fungibility had been restored for all dual listed counters and a letter to that effect was on it way to the Reserve Bank.

Barely a week after the decision, Gono suspended trade of dually listed shares saying fungibility could only resume after ZSE and the Securities Commission had put in place a framework outlining “the rules of play” to avoid under pricing of shares.

Gono had suspended trade of dually listed shares last year.

In a letter to authorise dealers seen by businessdigest, the Reserve Bank said it had not revoked its directive issued last year.

“Authorised dealers are advised that trading of dual listed shares offshore remained suspended,” Gono said.

Counters whose shares are fungible on the stock exchange are Old Mutual, Pretoria Portland Cement Company and ABC Holdings.

Stocks are often listed on several stock exchanges, and a fungible stock would allow one to exchange the shares purchased on one stock exchange to another country where it is also listed.

Most local companies which had foreign debts were re-paying them by buying shares in dual listed counters which they would dispose in either South Africa or England to earn foreign currency which had been scarce on the local market.

“However, the Zimbabwe Stock Exchange shall be required to put in place a framework outlining the rules of play, which should be well-defined and understood by all stakeholders on the stock exchange market,” Gono added.

Prices of dual listed counters had become the most reliable gauge of where the parallel market rate was at any given day.

“The Zimbabwe Stock Exchange and the Securities Commission should ensure that correct valuation of shares, to avoid under pricing of such shares,” added Gono.

“Foreign investors remain welcome to invest on the stock market. The deregulation of dividends and profits remittance allowed for the free flow of investment income and should result in creased foreign participation on the stock market,” Gono said.

BY PAUL NYAKAZEYA

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